Education and Allocative Efficiency in U.S. Agriculture

Abstract Rapid technological change creates production uncertainty with a consequent decline in allocative efficiency; productivity growth appears to augment the comparative advantage of large farms, which alongside rising operator education implies scale economies in the use of information. A method is provided for measuring cost inefficiency due to changes in input mix and failure to produce optimum output which is related to growth in farm size. Statistical results provide support for the hypothesis that education enhances allocative efficiency.