Exploring the Drivers of Microregional Agricultural Labor Productivity: Empirical Insights from Portugal

Understanding the factors that influence agricultural productivity is critical for promoting sustainable food production, economic growth, and rural livelihoods. Despite the fact that numerous theoretical and empirical studies on agricultural productivity have been conducted in recent decades, few have focused on the local geographical level, investigating the impact of specific agroecological conditions and farming systems. The current study examines the geographical micro-level determinants of labor productivity for all farmers and agricultural holdings in Portugal by estimating the parameters of an extended Cobb–Douglas production function and using panel data techniques. In general, the findings support major findings in empirical and theoretical literature that show a positive relationship between labor productivity and farm size, mechanization, irrigation, and human capital. Labor productivity is higher in regions with a higher prevalence of Mediterranean farming systems, such as orchards, vineyards, and horticultural crops, possibly due to crop suitability and ancient specialized knowledge, implying that a shift in farming techniques and crop selection, in balance with local natural and social specificities, may increase agricultural output and income for rural communities.