EFFECTS ON FARM INCOMES AND RURAL LABOUR OF A RELATIVE INCREASE IN WAGES*

We use the concept of the elasticity of farm incomes with respect to changes in input prices to analyse the effects of a large increase in relative wages on selected measures of farm incomes. In order to estimate the elasticity of farm incomes we have to estimate elasticities and cross-elasticities of demand and supply for farm labour and capital. The estimates of elasticity of demand for operator and hired labour allow us to calculate the impact of a rise in wages on numbers of farmers and hired labour employed in agriculture.     

Variability in wheat export demand elasticity: Policy implications

Agricultural economists and policy makers in the United States believe that the magnitude of the export demand elasticity is one of the most important parameters used in farm policy decisions. However, past empirical estimates show wide variation in the size of the U.S. export demand elasticity. Reasons for this wide variation go beyond differences in model specification, estimation methods, and period of estimation to involve factors such as trade policies and changes in the supply and demand conditions of foreign countries. In view of the continual variation in magnitude, the elasticity of export demand should be viewed as a variable rather than as a parameter. In this study, U.S. wheat export demand elasticities are computed using a world wheat trade model. The estimates show that the elasticities vary significantly over time. They also reveal that elimination of trade barriers would more than double wheat export demand elasticities.     

Farm work, off-farm work, and hired farm labour: estimating a discrete-choice model of French farm couples' labour decisions

We model jointly several types of discrete-choice labour decisionsof farm couples: farm work, off-farm work and hired farm labour.Rather than estimating a set of reduced-form participation equationsthat is subject to an internal inconsistency problem, we estimatea 16-choice multinomial model. We find that farm labour of operatorsand of spouses are substitutes. Hired farm labour increaseswith the farmer's qualifications, perhaps substituting for thecouple's labour inputs. Other adults in the household substitutefor the farm labour input of the farm couple and hired workers.We find that the organisation of work by French farm householdshas changed over time, in the direction of a more equal sharingof tasks and responsibilities between members of the farm family.     

LABOUR SUPPLY AND OFF-FARM WORK BY FARMERS: THEORY AND ESTIMATION

Off-farm employment has become increasingly important as an aspect of resource adjustment and a source of income in Australian agriculture. However, it is surprising that there is a paucity of work on this topic reported in the agricultural economics literature. Therefore, we have drawn upon recent developments in labour economics in order to investigate off-farm employment in Australia. A conceptual model of the allocation of a farmer's labour between farm and off-farm work is developed and applied to cross-sectional data from the Australian Agricultural and Grazing Industries Survey. A Tobit maximum likelihood procedure is utilised to test the influences of the life cycle, level of human capital, wealth, non-wage income and farm income on the off-farm labour supply of farmers.     

Off-Farm Employment and Grain Marketable Surplus in China

This paper examines the effects of off-farm employment on grain marketable surplus supply during the reform period in China. A theoretical framework demonstrates that farm households' supply behaviour depends not only on the profitability of farm production but also on alternative off-farm wage opportunities of household members. An empirical model, which assumes full income maximisation of farm households, simultaneously evaluates the effects of on-farm and off-farm income on their grain supply behaviour. Particular attention is paid to the effect of off-farm income through a comparison of conditional and unconditional grain marketable surplus supply elasticities. Results show that off-farm income had a strong negative effect on grain marketable surplus from farm households following liberalisation of factor markets in China and that this could lead to a loss of marketable surplus supply.     

THE ESTIMATION OF OFF-FARM LABOUR SUPPLY FUNCTIONS IN SASKATCHEWAN

In this paper, a farm-household utility maximising model which incorporates the time of both the farm operator and his wife is developed. The model is then used to estimate the off-farm labour supply of the operator and his wife, and develop policy recommendations concerning further increases in off-farm labour participation by farmers and their wives. A Heckman procedure is employed to test for sample selectivity bias. The results suggest that the supply of off-farm labour is inelastic for men but quite responsive to the estimated shadow wage for women.     

Agricultural Supply Response: A Survey

This paper surveys the literature on agricultural supply response to prices in developing countries. Empirical estimates of elasticities depend both on the methodology adopted and on country-specific factors relating to technology, economic structure and macro constraints. The paper seeks to establish some general conclusions on supply responsiveness within these limitations. Supply response to output prices at the aggregate and at the crop levels is considered first. Crop-specific acreage elasticities range between zero and 0.8 in the short run while long-run elasticities tend to be higher — between 0.3 and 1.2. Yield elasticities are smaller and less stable than acreage elasticities. Clearly, inter-crop pricing can be relied upon to effect shifts in the commodity composition of agricultural output. Evidence also suggests that supply elasticities vary systematically with such factors as price and yield risks, multiple-cropping, the importance of the crop, farm incomes, farm size, tenancy and literacy. The most controversial and important aspect of supply response is the effect on aggregate agricultural output of agriculture's terms of trade. Conventional time-series estimates range from 0.1 to 0.3. A major cross-country study reports an aggregate elasticity as high as 1.66. It is argued that cross-country estimates are apt to exaggerate aggregate responsiveness while time-series studies underestimate it somewhat. For LDCs, a tentative range of 0.4 to 0.5 seems plausible. Hence, the distributive effects of the terms of trade are likely to be more significant than the allocative effects. Asian evidence shows that only a third of the inter-country differences in fertilizer use can be attributed to fertilizer price policies. Provided new technologies and infrastructure are in place, fertilizer subsidies can help in technology diffusion and in overcoming credit constraints. The choice between price supports and input subsidies will depend on a variety of country- or situation-specific factors. Nevertheless, a significant general factor favoring price supports is that they can more easily be coupled with price stabilization goals than input subsidies. Though sparse, the available evidence on the response of marketed surplus suggests that price policy is not a reliable instrument for regulating inter-sectoral trade.     

Drinking water and off‐farm labour supply: between‐gender and within‐gender bias

In this paper, we use the China Health and Nutrition Survey (CHNS) panel data to analyse the impact of drinking water on off‐farm labour supply. A two‐stage least squares (2SLS) multivariate Tobit regression model with random effects was applied. We find that impacts of drinking water conditions on off‐farm labour supply may be greater for women than men but depends on the specific family role or family structure. A strong within‐gender effect exists in households. For example, daughters are not sensitive to water access nor water quality, but householder's spouses are sensitive to water access, and daughters‐in‐law are sensitive to water quality. Our findings suggest that infrastructure development in improved access to safe water has contributed positively to reductions in traditional gender biases, evening the playing field between daughters, daughters‐in‐law, mothers and mothers‐in‐law. We also find that water the infrastructure program may actually encourage off‐farm labour mobility, reducing the supply of agricultural labour and the share of household labour on the farm. Thus, a broader approach to water policy should also include public investment in achieving greater labour efficiency and productivity.     

Fishermen’s competitiveness and labour market performance: Evidence from shrimpers in Bangladesh

We conduct an experiment to determine competitiveness among shrimpers who engage in collecting shrimp seeds in the southwestern coastal region of Bangladesh. We then examine how competitiveness affects the labour supply decisions and labour market performance of these shrimpers. Our results show that shrimpers who prefer competition are more productive than shrimpers who do not prefer competition. Competitive shrimpers secure better prices and earn higher incomes selling their catches. We estimate that their wage elasticity of participation ranges from 0.4 to 0.5, which is consistent with preferences under neoclassical assumptions. Competitive shrimpers have a slightly greater wage elasticity than non-competitive shrimpers, suggesting that they might be more responsive to expected earnings. Our results have important policy implications for the efficient management of common pool resources.     

Assessing the Impact of the ‘Decoupling’ Reform of the Common Agricultural Policy on Irish Farmers’ Off‐farm Labour Market Participation Decisions

This paper assesses the impact of the ‘decoupling’ reform of the Common Agricultural Policy on the labour allocation decisions of Irish farmers. The agricultural household decision‐making model provides the conceptual and theoretical framework to examine the interaction between government subsidies and farmers’ time allocation decisions. The relationship postulated is that ‘decoupling’ of agricultural support from production would probably result in a decline in the return to farm labour but it would also lead to an increase in household wealth. The effect of these factors on how farmers allocate their time is tested empirically using labour participation and labour supply models. The models developed are sufficiently general for application elsewhere. The main findings for the Irish situation are that the decoupling of direct payments is likely to increase the probability of farmers participating in the off‐farm employment market and that the amount of time allocated to off‐farm work will increase.     

How Do Health and Social Insurance Programmes Affect the Land and Labour Allocations of Farm Households? Evidence from Taiwan

To protect farmers from health care costs and risks to livelihood, most countries have developed special health and social insurance programmes specifically for farmers. While numerous studies have examined the determinants of participation in these programmes, little is known about how they influence famers' land and labour allocations. Without government‐sponsored health and social insurance, farmers may seek off‐farm employment in order to obtain similar benefits. Conditioning eligibility for social insurance on minimum land holdings and on‐farm work days can lead to delayed retirement and other forms of job lock. We investigate these issues using a unique dataset of 703,287 farms in Taiwan. After controlling for non‐random participation in Taiwan's social insurance programme, we find that the programme increases (decreases) on (off) farm labour supply, and decreases the amount of set‐aside land. This suggests that payments from social insurance substitute for those issued through land set‐aside programmes to some extent, and that failing to account for this substitution increases the cost of achieving both programmes' objectives.     

Land size and productivity in the livestock sector: evidence from pastoral areas in China

This article explores the relationship between land size and productivity in the livestock sector. Household panel data from pastoral areas in northwestern China were analysed. Results suggest an inverse relationship (IR) between land size and the number of livestock per ha. IR can be largely explained by labour input intensity, which is negatively correlated with land size. We find that household’s labour demand is not separable from household’s labour supply and households’ decisions to rent land and hire labour for grazing are significantly related to the labour–land endowment ratio. These findings are consistent with the Chayanovian explanation that labour input intensity varies with farm size due to unobserved interhousehold variation in shadow wage rates. In addition, participation in the labour market does not significantly influence the IR for the employer, while the practice of land renting reduces, but does not eliminate, the IR for the lease. These findings point towards the potential for using factor markets to optimise pasture‐based livestock production scale, and the need to promote the factor market development to achieve efficiency in resource use.     

Analysing Production Technology and Risk in Organic and Conventional Dutch Arable Farming using Panel Data

This paper compares the production technology and production risk of organic and conventional arable farms in the Netherlands. Just–Pope production functions that explicitly account for output variability are estimated using panel data of Dutch organic and conventional farms. Prior investigation of the data indicates that within variation of output is significantly higher for organic farms, indicating that organic farms face more output variation than conventional farms. The estimation results indicate that in both types of farms, unobserved farm‐specific factors like management skills and soil quality are important in explaining output variability and production risk. The results further indicate that land has the highest elasticity of production for both farm types. Labour and other variable inputs have significant production elasticities in the case of conventional farms and other variable inputs in the case of organic farms. Manure and fertilisers are risk‐increasing inputs on organic farms and risk‐reducing inputs on conventional farms. Other variable inputs and labour are risk increasing on both farm types; capital and land are risk‐reducing inputs.     

A supply‐side analysis of agritourism: Evidence from farm‐level agriculture census data in Taiwan

Due to consumers’ increased demand for leisure and farmers’ need for income diversification, researchers and policymakers have significant interest in topics related to agritourism. This study provides a supply‐side analysis on agritourism using Taiwan as a case study. Utilising a sample of 720,148 family farms from the 2010 agriculture census survey in Taiwan, we quantify the effects of engaging in the agritourism business on farm income, on farm succession, and on family members’ labour supply decisions between on‐farm and off‐farm work. An analytical framework that combines the doubly robustness regression model and semiparametric estimation is proposed to address the endogeneity bias. Results indicate that participation in agritourism increases farm income and family farm succession. Farms engaging in agritourism also have more family members working on the farm, and fewer family members working off‐farm, compared to farms not engaging in agritourism. Although agritourism enterprises are developed to meet consumers’ demand for leisure, our results show that they also improve the economic welfare of farm households.     

A NOTE ON OFF-FARM INCOME OF FARM FAMILIES IN AUSTRALIA*

Past studies of the farm sector have concentrated on the use of farm based resources in the farm context alone. Changes in the economic environment have widened the opportunities available to these resources and have thus tended to make this narrow definition of the farm firm less relevant. Some recognition of this situation has emerged in more recent studies. The aim of this note is to collate and examine the degree to which farm labour resources are employed in off-farm activities in Australia. The main conclusion drawn from the evidence available is that, while in aggregate part-time farming is a fairly minor activity, in some sectors it is increasing in importance and constitutes a considerable outlet for farm based labour resources.     

An Analysis of U.S. Aggregate Output Response by Farm Size

Past empirical evidence on supply response by size of farm in the U.S.A. provides no clear basis to conclude that supply elasticities vary systematically with farm size. In this paper, the central hypothesis that no systematic relationship exists between production response to price and size of farm is rejected. U.S. farms are disaggregated into nine economic size categories and own-price supply elasticities are measured for per farm and total agricultural output. Empirical results from this study suggest that supply response does vary systematically by farm size, with smaller farms exhibiting greater elasticities than midsized farms.     

The income elasticity of meat: a meta‐analysis

The demand for meat has been estimated by many studies utilizing various data and estimation methods. In this study, we perform a meta‐analysis of the income elasticity of meat that involves regressing 3357 estimated income elasticities, collected from 393 studies, on variables that control for study characteristics. Across several meta‐regression specifications, we find significant differences in income elasticities tied to the type of meat being studied, as well as a few functional forms, data aggregations, publication characteristics, and locations of demand. However, many study characteristics do not significantly influence reported income elasticities. Less concern should be given to such characteristics when choosing an income elasticity from the literature.     

What Was Left of the Groundnut Scheme? Development Disaster and Labour Market in Southern Tanganyika 1946–1952

The East African Groundnut Scheme in Tanganyika is probably the most dramatic and most cited failure of the ambitions of British late colonial developmentalism. Issues of labour supply in the scheme's short history, and the relationship of labour supply with the peasant economy of Southern Province, have received almost no attention, a gap which this article aims to begin to fill. It suggests that the implementation of the scheme gave rise to a political battle over labour market control between the colonial state in Tanganyika and scheme managers. The paper documents how, without any support from the colonial administration, the scheme attempted to recruit the large numbers of workers it required, and its frustrations in doing so. It investigates the factors that prevented labour supply satisfying demand, how peasants in the area engaged with the labour market (and were able to adjust their participation in it), and the impact of labour market growth on the household farm economy.     

Simultaneous estimation of work choices and the level of farm activity using panel data

We analyse the simultaneous determination and evolution overtime of work choices and the level of farm activity, using apanel of Israeli farm households. We estimate jointly a multinomialchoice model of work activity and an endogenous switching regressionof farm size, accounting for unobserved heterogeneity and correctingfor simultaneity bias. Our results imply that some family farmstend to expand over time and specialise in farming, whereasother farm households downsize their farming operation and increasetheir engagement in the off-farm labour market. Therefore, thesize distribution of farms is converging towards a bimodal distribution.     

Supply side constraints in the Israeli housing market—The impact of state owned land

House prices in Israel have risen since 2008 by as much as 98%. Much of this increase is attributed to low levels of housing supply and housing supply elasticities. In Israel land is frequently owned by the state. This results in heavy government involvement in the housing market through the control of land supply via land tenders. This paper estimates the impact of state owned land on the Israeli housing market focusing on these unusual conditions of land supply. A model for the creation of new housing units is proposed. This incorporates land tenders, enabling the estimation of housing supply dynamics with an accurate measure of public land supply. The model is tested using regional panel data which facilitates the dynamic estimation of national and local supply elasticities and regional spillovers. The paper uses novel data sources resulting in a panel of 45 spatial units over a span of 11 years (2002–2012). Due to the nonstationary nature of the data, spatial panel cointegration methods are used. The empirical results yield estimates of housing supply price elasticities and elasticities with respect to land supply. Results show that housing supply is positively impacted by governmental decisions but the impact is low. Supply elasticity with regard to government land tenders stands at around 0.05 over the short run and 0.08 over the long run. Government policy of offering land in low demand areas and fixing minimum-price tendering does not seem to affect housing supply. Policy implications point to the need for more sensitive management of the delicate balance between public and private source of land in order to mitigate the excesses of demand shocks.