Mechanization and employment in Brazilian agriculture, 1950-1971

Brazilian mechanization has occurred at an extremely rapid rate in the post-War period and Brazil has actively intervened in its factor markets. In summary, machinery either replaced labor or prevented an increase in labor absorption. However, there was a yield effect of 10 to 20 percent from improved land preparation. More labor could have been absorbed in Brazilian agriculture if the capital price had not been subsidized. However, less than 20 percent of Sao Paulo mechanization was associated with the distorted factor price evaluated. Moreover, the private rate of return for mechanized land preparation was high even for small farmers. The public rate of return to mechanization will depend upon the weighting of the labor replacing, yield increasing, and other effects of mechanization by Brazilian policy makers. The social cost of labor released from agriculture still remains to be measured.