Changing age structure and input substitutability in the Thai agricultural sector

Abstract

     The rapidly aging society and agricultural abandonment by young people in Thailand have changed the age structure of Thai agricultural labor, and influenced the potential for agricultural production. Thus, it is important to study the feasibility of other inputs as a substitute for labor. This paper estimated the degree of elasticity substitution of inputs, particularly young labor, older labor, and physical capital. The elasticity of input substitution was estimated using a nested constant elasticity of substitution (CES) production function and nonlinear regression analysis. Research data were obtained from the annual secondary data of government sources from 1990 to 2013. The findings indicated that the input substitutability of young and older labor was low. However, capital and labor could substitute for each other. Moreover, capital better substituted for young labor than older labor. The results suggested that both the public and private sectors should encourage young people to engage in the agricultural sector, and support investment in farm machinery as a labor substitute.