Timothée Demont : timothee.demont[at]univ-amu.fr
Eva Raiber : eva.raiber[at]univ-amu.fr
The mechanization of production has become a primary feature of modern agriculture and is central to agricultural labor productivity. This paper estimates the returns to mechanization and its impact on labor using a randomized controlled experiment. Treatment farmers were given subsidy vouchers to access agricultural equipment from nearby custom hiring centers(CHC). In addition, a subset of treatment farmers were given cash transfers. The voucher treatment increases overall mechanization hours, with an intent to treatment effect size of about 0.13 standard deviations (a treatment on the treated effect size of 0.36 standard deviations). We find no significant improvements in productivity due to mechanization on average. However, family labor decreases in response to the subsidy in capital, and farmers reduce hired labor in all farming processes, including those not directly affected by mechanization. We document that family labor is mostly occupied in supervision activities, and that their lower engagement in farming is associated with higher non-agricultural income. The decline in supervision labor and the decline in hired labor across farming processes are interpreted as evidence of output standardization, which is beneficial in the presence of contracting frictions. We use key elasticities from the experiment and a structural model of task-replacement to infer the marginal return to mechanizable tasks, which we estimate at 35% per season.