Determinants of microregional agricultural labour productivity – Evidence from Czechia

• We tried to explain micro-regional differences in agricultural labour productivity.
• Effects of land-use fragmentation, urbanization economies and farm size structure were tested.
• Larger plots associated with higher agricultural labour productivity despite potential adverse effects of land tenure.
• Neither urbanization economies nor farm size influence microregional agricultural labour productivity in Czechia.

In this paper we aimed to explain differences in agricultural labour productivity at microregional level. We tested the effects of three major independent variables – farmland fragmentation, urbanization economies and farm size structure with particular emphasis on the relationship between land-use fragmentation and microregional differences in agricultural labour productivity. Our principal question therefore was if higher agricultural labour productivity at microregional level is associated with internal scale economies resulting from large average farm size (in terms of employment), proximity to large cities as a proxy for urbanization economies and lower levels of land-use fragmentation. We also asked if productivity gains from large average size of plots is higher than potential losses resulting from land tenure (tenants are generally less productive than farmland owners). Drawing on a case study of Czechia – a country with extremely fragmented farmland ownership, but the largest average size of plots in the EU and a strong role of farmland rental market – we confirmed our initial expectation that land-use fragmentation affects negatively microregional agricultural labour productivity. Larger average size of plots is positively related to microregional agricultural labour productivity despite potentially negative effects of land tenure. At the same time, no significant effects of urbanization economies and farm size structure were documented.