ChileanJAR

International evidence shows that the positive relationship between product and agricultural labor has weakened during the last 30 years, especially in emergent economies. Chilean agriculture has not been left out of this phenomenon The main purpose of this reseach was to estimate the causality relationships that govern the product, employment and salaries in the Chilean silviculture-agricultural-livestock sector, using a cointegration approach. Quarterly data from the 1996-2005 period were employed to estimate agricultural labor demand. A Cobb-Douglas agricultural production function was employed and from it were derived the minimum cost function and the labor demand as bases of this study; the latter was approximated log-linearly to find different measures of elasticity. The main results shows that the estimated demand for agricultural labor has long-run employment-product and employment-salary elasticities of 0.38 and -0.88, respectively. An important conclusion suggests that, compared with the employment-product and employment-salary elasticities of labor demand on the aggregated level, agricultural employment in the long run results less sensitive to changes in the product, but more sensitive to changes in salaries.