Environmental quality and urbanization reduce long run agricultural labor productivity in Ethiopia

Abstract

This paper analysed the impact of environmental quality on agricultural labor productivity in Ethiopia between 1990 and 2023. Fully Modified Ordinary Least Squares and Dynamic Ordinary Least Squares estimation techniques were applied. To ensure robustness, the Canonical Correlation Regression method was also applied. The study has also used the Granger causality test to detect the direction of the relationships to provide a fuller insight. The results indicated that environmental quality, as proxied by ecological footprint and urbanisation, significantly reduces agricultural labor productivity, as represented by agricultural output per worker in the long run. However, economic growth, population growth, and primary education exert positive long-run effects on agricultural labor dynamics. The study found that there exists bidirectional causality between agricultural labor productivity, economic growth, but unidirectional causality of environmental quality, population growth, urbanization, and primary education with agricultural labor dynamics. These findings implied that policymakers should consider the full insight of the complex relationships between agricultural labor productivity and environmental consequences, and would also enable them to formulate sustainable strategies that would lead to decent work and economic growth within the SDGs, Goal 8 in Ethiopia.