Wage Growth, Landholding, and Mechanization in Agriculture : Evidence from Indonesia
This paper uses farm panel data from
Indonesia to examine dynamic patterns of land use, capital
investments, and wages in agriculture. The empirical
analysis shows that an increase in real wages has induced
the substitution of labor by machines among relatively large
farmers. Large farmers tend to increase the scale of
operation by renting in more land when real wages increase.
Machines and land are complementary if the scale of