Input interactions and Structural Dynamics in Greek agriculture productivity

Abstract

Abstract This paper aims to analyze the impact of fixed capital, variable inputs and labor and their interaction to the volume of the agricultural output in Greece, for the period 1981 - 2021, using the estimation equation of a Cobb-Douglas equation form. At a second level, an attempt is made to investigate possible changes in this relationship over time, using the Bai-Perron structural changes method and their effect on the observed relationship between agricultural inputs and output. The existence of a structural break in 2006 was confirmed, which is accompanied by differences in elasticities before and after this year. During the period 1981-2005, positive elasticities of labor and fixed capital were observed, indicating that the increase in these factors contributed positively to agricultural production, but with decreased returns to scale. In contrast, after 2006, negative elasticity of labor and fixed capital was detected, while the elasticity of variable factors of production remained positive. This change in elasticities indicates the inefficiency in the use of fixed capital and labor after 2006 and the increased influence of variable production factors on agricultural production. These findings highlight the need for continuous monitoring and analysis of factors affecting agricultural production, in order to enhance the competitiveness of the corresponding sector and ensure its sustainability in the future, offering new perspectives for the design and implementation of policies that will enhance agricultural development. JEL classification: O130, Q100, R150