The Estimation of the Elasticity of the production factors A Case Study of the Agricultural sector of Iran

This research estimates the elasticity of the production factors of labor and capital for agricultural sector in Iran covering data 1986 to 2010. The annual time series data which is using in the survey is obtained from the website of Central Bank. The Cobb-Douglas function is applied in order to estimate agricultural sector production function which it involves OLS method using EVIEWS8 and SPSS software. The findings of the paper show in the short run during the years of the study the coefficients of the natural logarithm of the real capital and the natural logarithm of the labor in Iran are 0.601531 and 0.836710, respectively but the coefficient of labor isn’t statistically significant. In fact, these coefficients show the amount of elasticity of production factors for the agricultural sector in Iran. Hence, if the capital in the agricultural sector increases one percentage then the production in this sector increases 0.601531. The results of the research will be useful for the decision makers in Iran agricultural sector.