This paper is a study of the aggregate behavior of crop production in Egypt. We find that the output growth rate declined in the 1970s but there were some signs of recovery towards the end of the decade. This trend cannot be explained by the observed-cyclical movements in profitability and in the real price of aggregate output. On the other hand, investment in infrastructure goes a long way towards explaining the trends both in aggregate output and in land profitability. Increased investment in agriculture infrastructure tends to raise the growth rate of the sector and, at the same time, to increase labor's share in production at the cost of property share. Our observations also suggest that the demand for agricultural labor is rather inelastic with respect to the wage rate. Therefore, using the agricultural sector as an absorbent of employment shocks in the rest of the economy may lead to significant variability in income distribution.
ASJC Scopus subject areas
- Geography, Planning and Development
- Sociology and Political Science
- Economics and Econometrics