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This paper aims to examine the contribution of the labor input to agricultural production efficiency. If an increase in numbers of labor does not increase production efficiency, we should have reason to question the current quantity-oriented labor policies in terms of solving the labor shortage issue. In addition, we want to examine the marginal rate of technical substitution (MRTS) between the labor input and other inputs. The MRTS will provide a clear idea of how labor can be replaced with other inputs without losing total production. Finally, the influence of farm labor on economies of scale and economies of scope will also be discussed. We will investigate whether the scale and size of the farm has a significant role in determining production efficiency for our target farmers.

The Efficiency of Labor Input in the Tree Nut Growers Industry: A Stochastic Frontier Production Approach Study in Butte County, California