Policies on Productivity – Some Lessons from Agriculture?

Since 1940 technological change in agriculture has led to substantial increases in productivity and significant changes in farm structure. Over this period labor productivity increased about 6 percent per year, and farms have increased in size. In 1940 about 15 percent of the U.S. work force was in agiculture; by 1980 this had declined to 3 percent. Productivity gains and the movement to scientific industrialization of food production and distribution have contributed greatly to the improvement in real per capita incomes for the society as a whole. Productivity gains, however, involve changes and adjustments that affect people; existing skills and capital become obsolete and lose value. The gains and costs from change that occurs often are not equitably distributed. The policy problem in an industrial democracy is to promote productivity increase while at the same time mitigating adverse consequences that flow from changes that alter the level and distribution of incomes, wages and relative prices.