# Relation of changes in productivity and remuneration of the labor factor in agriculture in EU Member States

## TL;DR

The study examines if rising agricultural productivity in EU countries supports higher worker pay, finding that in some nations, pay increases outpace productivity.

## Contribution

The paper introduces a novel analysis of productivity and remuneration dynamics in EU agriculture using panel regression and comparative methods.

## Key findings

- In several EU countries, remuneration growth outpaced productivity growth, indicating potential inefficiencies.
- Panel regression confirmed that productivity growth correlates with reduced labor input and increased remuneration.
- Productivity increases in many countries mainly resulted from reduced agricultural employment.

## Abstract

The article investigates whether labor productivity serves as a source for financing remuneration and whether productivity growth is adequate to support the corresponding increase in compensation within the agricultural sector. The analysis is grounded in the producer’s equilibrium, Clark’s marginal productivity theory, and the Lewis model. We utilized constant price data from the Economic Accounts for Agriculture across all EU Member States for the 2010–2022 period, encompassing the entire agricultural sector. The research methodology consisted of two stages: first, a comparative analysis of the examined categories was conducted; second, the conclusions were verified using the results of a panel regression analysis. The study reveals that, in many concerned countries, the rise in labor productivity primarily resulted from decreased agricultural employment. In specific countries, including the Czech Republic, France, Croatia, Ireland, Italy, Luxembourg, the Netherlands and Slovenia, the growth in remuneration outpaced productivity growth, suggesting potential management inefficiencies. The results of the panel regression models confirmed that labor productivity growth is strongly associated with a reduction in labor input and an increase in labor remuneration.