Is off-farm income reforming the farm? Evidence from Mexico |
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Authors: | Lisa Pfeiffer Alejandro López-Feldman J Edward Taylor |
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Institution: | Department of Agricultural and Resource Economics, University of California, Davis, CA 95616, USA;Escuela de Economía, Universidad de Guanuajuato, UCEA-Campus Marfil, Fracc. I, El Establo, Guanajuato GTO 36250 México;Department of Agricultural and Resource Economics, University of California, Davis, CA 95616, USA |
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Abstract: | Does access to off-farm income complement or compete with agricultural production? This article explores the effect of off-farm income on agricultural production activities, using data from the 2003 Mexico National Rural Household Survey. We first discuss the theoretical conditions under which access to off-farm income may influence production in an agricultural household model. Instrumental-variable (IV) estimation methods are then used to test whether agricultural production activities, technologies, and input use differ between households with and without access to off-farm income. We find that off-farm income has a negative effect on agricultural output and the use of family labor on the farm, but a positive impact on the demand for purchased inputs. There is also a slight efficiency gain in households with access to off-farm income. Findings offer insights into how household production evolves as rural households increasingly engage in off-farm income activities. |
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Keywords: | D13 D24 J24 O13 O15 Q12 |
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