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Abstract

This study employs a Tὄrnqvist index approach to construct quality-adjusted labor index for the U.S. farm sector using the volume (hours worked) of 192 demographic components and their corresponding cost shares. We decompose labor input change into quality change and quantity change. The results show that between 1948 and 2011 the decline of total hours worked resulted in -0.58 percentage points of output growth per year while increasing labor quality contributed to 0.08 percentage points of annual output growth. We further decompose labor quality change into a change in the educational attainment of the labor force and a change due to other factors. Our results show that the education component contributed to most of the labor quality changes during the study period. However, the contribution of educational attainment is greater in earlier years than in later years.

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