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Technical Change and Income Distribution

In: The Political Economy of Agrarian Change

Author

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  • Keith Griffin

    (Queen Elizabeth House)

Abstract

Having described in the previous chapter the factor markets and the various methods of cultivation that are available to a farmer, we must now consider what are the effects of these market and technical characteristics upon the propensity to innovate in the agricultural sector. We know from the work of W. E. G. Salter on technical change in industry1 that when the cost of investment is cheap relative to labour, the spread between the best practice technique and the average will tend to be narrow. By analogy, the lower is the relative cost of material inputs in agriculture, the more widespread will be the adoption of an innovation, i.e. the more readily will farmers invest in capital which embodies an improved technology. Either a fall in interest rates, or a decline in the price of equipment or a rise in wages will tend to induce farmers to abandon old methods of production and introduce new methods which are more intensive in the use of material inputs. On the other hand, when the cost of investment is expensive relative to labour, material inputs will not be widely used and the sector will appear to be ‘traditional’.2

Suggested Citation

  • Keith Griffin, 1979. "Technical Change and Income Distribution," Palgrave Macmillan Books, in: The Political Economy of Agrarian Change, edition 0, chapter 0, pages 46-94, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-16176-8_3
    DOI: 10.1007/978-1-349-16176-8_3
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