Thailand has particularly low labour productivity in agriculture as compared to industry and services. The situation is worrisome as the country population is increasingly ageing amidst the slow pace of structural transformation and the confronting middle-income trap. It is thus the purpose of this paper to investigate factors affecting labour productivity in the agricultural sector of Thailand taking into account the role of population ageing. The error correction modeling technique and time series data during 1970-2014 are employed to examine sources of the agricultural labour productivity. The results show that major factors positively influencing the agricultural labour productivity are the capital-labour ratio, land-labour ratio, research budget-labour ratio, and education level. However, there is no statistical evidence that the population ageing variable has a significant impact on the productivity. The results highlight the importance of physical capital accumulation, farm size, agricultural research, and human capital investment.
JEL classification numbers: J24, O13
Keywords: Labour Productivity, Population Ageing, Thai Agriculture