Quantitative Study of Underemployment in Agricultural Sector of Thailand Using Farm Village Development Database

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Previous work on the estimation of agricultural production functions using Farm Village Development Database of Thailand from 1986 to 2003 was unsatisfactory from both statistical and economic points of view. When the alternative data based on micro-data from agricultural household survey in 1997 and 1998 conducted in three villages(Wang Yang, Jora Kae Yai, and Sa Ka Chum)from Suphan Bri province in Central Plain by Ohtsuka, Isvilanonda, and Hossain and others is used, estimated production functions become more preferable and credible. By comparing the marginal productivity of labor obtained from the estimated production function and the wage rate at the individual household level, we find that the two thirds of total agricultural households use optimal labor input and the remaining one third use more than optimal labor input. This contrasts the fact that, at the aggregate level, the average agricultural household uses optimal labor input. In 2002, Shintani also conducted a survey in the same three villages, and obtained good estimates of production functions. Similar results on the optimal and non-optimal labor inputs are again obtained by comparing the marginal productivity of labor and the wage rate. In conclusion, I confirm the existence of the underemployment in some parts of the agricultural households at the individual level, while the underemployment is not observed at the aggregate level or on average. In the analysis, both traditional production function and stochastic frontier production function are estimated.