Research on World Agricultural Economy

Estimating Labor and Total Factor Productivity in the Jordanian Agricultural Sector

Ahmad Al‑Majali

Department of Economics, Business and Finance, Mutah University, Mu’tah, Karak 61710, Jordan

DOI: https://doi.org/10.36956/rwae.v6i2.1794

Received: 28 February 2025 | Revised: 24 March 2025 | Accepted: 31 March 2025 | Published Online: 12 May 2025

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Abstract

This study investigates the Jordanian agricultural sector's labor productivity, technical efficiency, and total factor productivity from 1990 to 2023. It studies the interaction between agricultural output and the factors of production, including labor, capital, and land, while emphasizing the role of economic policy in maximizing output per unit of input. In terms of methodology, the study applied econometric models, including the growth accounting methodology and the vector error correction model (VECM) to analyze the long-run relationship and the data envelopment analysis (DEA) to measure technical efficiency. The results showed that labor productivity and total factor productivity (TFP) in the Jordanian agricultural sector went through three phases. The first was a noticeable decline in the 1990s, followed by an improvement during the period 2000–2011, and then a renewed slowdown after 2011, which was attributed to several factors, including a decline in agricultural investments, restrictions on foreign labor, and rising production costs. The VECM model results indicated a long-term relationship between agricultural output and each of capital, labor, and cultivated land, with labor showing greater importance than the other factors. On the other hand, the results of the DEA showed an improvement in technical efficiency up to 2011, followed by a decline due to the underutilization of economies of scale and weak resource use. The study recommends focusing on policies that support investment in agricultural technologies; It also recommends promoting local labor training and developing agricultural infrastructure to improve efficiency and achieve sustainable productivity growth.

Keywords: Labor; Total Factor Productivity; DEA; Agricultural; Jordanian

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