This paper examines the effects of aging and income subsidies on farm efficiency in Korea by utilizing the Korean Farm Household Economic Survey from 2008 to 2015. A stochastic frontier model with a non-monotonic assumption on the effect of efficiency factors is implemented to reflect a super aging and less developed production structure in Korean agriculture. This study finds continuously decreasing farm efficiency with age, which contradicts the commonly assumed inverted-U relationship between age and productivity. Especially, we find that labor is the most important factor to explain recent farm efficiency losses in Korea. Furthermore, this paper finds that the Korean income subsidy has a negative effect on farm efficiency. Our results provide two policy implications for the government of Korea. First, even though the “Returns to the Farm and Rural program” is appropriate, Korea should modify the program to encourage more young people to participate this program rather than old people, in order to attain the sustainable development of the agricultural sector. Second, a policy maker in Korea should consider a coupled subsidy that is directly related to farm production rather than a decoupled subsidy, regardless of the lower efficiency of the coupled subsidy in achieving agricultural development.

This study examines the validity of the export-led growth hypothesis in the context of developed countries’ agricultural sector, considering the existence of a common market among countries. Using the annual data of Organisation for Economic Co-operation and Development (OECD) countries from 1997 to 2016, we analyze the effect of agricultural exports on agricultural growth. For the comparison between developed countries with and without common markets, we create three subsamples (OECD, the European Union [EU] countries among OECD members, and the non-EU countries among OECD members). Estimation results show that agricultural exports (imports) have a positive (negative) effect on agricultural growth only in the case of the EU subsample. These results imply that access to foreign markets is important to validate the export-led growth hypothesis in the agricultural sector of developed countries.