Estimating the long-run supply and demand for agricultural labour in the UK

In this paper we derive supply and demand equations for labour in the UK agricultural sector. Using a cointegrating vector autoregression framework, identifying restrictions from theory are imposed, and the long-run labour supply and demand relationships are estimated. We find a significant elasticity of substitution between labour and the other factors of production. The minimum wage has had a significant negative impact on the level of labour demanded.