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.     

Multiple job holdings among dairy farm families in New York and Ontario

Previous empirical studies of multiple job holding have tended to focus on the characteristics of those obtaining off-farm employment and the factors affecting the hours supplied to those obtaining off-farm activities. None of these studies have explicitly addressed the reasons behind the decision to seek off-farm employment. Neither have they been able to examine in-depth the important issue of how this major component of the farm sector responds to alternative policies, since most studies have used cross-sectional data for a given region. A comparison between countries would permit the analysis of how multiple job holding responds to differing government policies. The purpose of this paper is to examine the reasons for and factors affecting multiple job holdings of dairy farm families in neighboring regions of two counties, United States and Canada. The bordering regions of New York and Ontario have similar geographic conditions but significantly different farm support and social service policies. The results indicate the importance of farm income on why people work off the farm and provide evidence of multiple job holding as a flexible mechanism for coping with changes in the economic environment facing the household. For operators, the driving characteristics influencing off-farm labor participation is the farm's financial position. The supply-managed milk marketing system ensures higher and more stable returns for Ontario dairy farm labor. In contrast, it is family demographics, educational level and social support policy that appears to largely influence spousal off-farm employment decisions. Free medical care in Ontario lowers the reservation wage for household members. The effect of these farm and social support policies on the relative returns to labor in agriculture and non-farm employment explains the lower participation rate and hours supplied in off-farm work by both operators, and hours supplied in off-farm work by both operators and spouses in Ontario dairy farm household.     

ROLES OF WOMEN ON FARMS: A PILOT STUDY

Official statistics do not reveal the nature of the contribution which farmers' wives make to the farm labour force. On the basis of a pilot study, three roles for women on farms were identified. Main distinguishing features were division of labour between husband and wife, frequency of manual work, responsibility for farm enterprises, participation in formal organisations and approach to housework. Home-centred farm housewives only work on the farm occasionally, working farmwives assist their husbands regularly while women farmers threaten male status by doing “man's” work. Reasons for women playing one role rather than another are discussed. Trends in agriculture suggest that the farmer's wife's contribution to the farm business will become still more significant in future. “The concept of ‘the farmer and his wife’ so often used by agricultural economics is far from having universal validity” (Ashby, 1953: 97).     

PARTICIPATION OF FARM OWNERS IN FARM AND OFF-FARM WORK INCLUDING THE OPTION OF FULL-TIME OFF-FARM WORK

The option of working full-time off the farm is generally neglected in farmers' time allocation studies. In this paper, a generalised multinomial logit model, in which the choices are working only on the farm, allocating the time between farm and off-farm work, or working only off-farm, is estimated using Israeli data. The results show that the explanatory variables have significantly different effects on utility for off-farm workers who also work on the farm versus those who do not. There seem to be incentives to work full time rather than part time off the farm. These conclusions cannot be reached if farm owners who do not work on the farm are excluded from the estimation. The conclusions imply that policy intended to encourage pluriactivity could instead result in increased specialisation in full-time farm work or full-time off-farm work if it does not target the right incentives.     

Farmers' time allocation between farm work and off-farm work and the importance of unobserved group effects: evidence from Israeli cooperatives

Agricultural cooperatives differ in many attributes which affect members' farm and off-farm earnings in different ways. As a result, time allocation patterns between farm work and off-farm work will vary significantly across cooperatives. Participation equations in farm work and off-farm work of farmers who are members of Israeli moshavim are estimated jointly, including a cooperative-specific factor in each equation. The fixed effects are found to be significant and important, but can be only partly explained by observed cooperative attributes. This provides another support to the Monte Carlo results of Borjas and Sueyoshi, that controlling for group effects is superior to alternative models. The results also imply that unobserved factors have considerable effects on farmers' time allocation, and hence should be controlled for whenever possible.     

Off-Farm Work Participation of Israeli Farm Couples: the Importance of Farm Work Participation Status

This article claims that coefficients of off-farm work participation equations for farm residents might be estimated inconsistently if selectivity based on farm participation is ignored. Participation equations will be different for farm residents who do not work on farm, especially with respect to the dependence of reservation wages on farm attributes. I estimate an endogenous switching regression model in which farm and off-farm participation equations are estimated jointly while the off-farm participation coefficients are different for those who work on farm and those who don't. Using the 1981 Israeli Census of Agriculture data, I reject the hypothesis of insignificant selection bias and the hypothesis of equal coefficients in the two subsamples.     

Understanding the variation in estimates of off-farm labour supply elasticities: A meta-analysis

The design of rural development policies and government programmes in support of farm operations and farm households relies on precise estimates of off-farm labour supply elasticities. However, the wide variation in estimates dilutes their power to predict the magnitude of these targeted interventions. We perform a meta-analysis of estimates of off-farm labour supply elasticity to identify systematic factors that influence these estimates. A sample of 137 elasticities is obtained from 43 studies which use data ranging from 1960 to 2012. We examine theoretical assumptions, data availability and empirical specifications, and other study-specific characteristics. Controlling for potential publication bias, we estimate that the elasticity is approximately 0.64 to 0.77. Results of the analysis show that estimates are affected by modelling choices controlling for self-selection and life-cycle elements. However, we found no compelling evidence that study-specific characteristics of off-farm labour supply functions, including various measurements of labour supply, explain variation in the elasticities.     

The Varying Impacts of Agricultural Support Programs on U.S. Farm Household Consumption

Farm households are economic agents whose income is derived from farm, off-farm, and government sources. This article uses farm-level data from the Agricultural Resource Management Survey (ARMS) and recent advances in the econometric theory of dynamic pseudo-panels to show that farm households consume various sources of income differently at the margin. Particular attention is given to a specific type of lump-sum government transfer payment intended to be decoupled from (independent of) farm production decisions. The results suggest that relatively decoupled government subsidies have a greater marginal effect on farm household consumption than subsidies that are tied to market conditions.     

The Impact of Coupled and Decoupled Government Subsidies on Off-Farm Labor Participation of U.S. Farm Operators

With the 1996 Farm Act, the United States introduced payments that were designed to be "decoupled." Labor allocation choices are likely to be affected by receipt of payments, and income from off-farm jobs has been the major source of income for most farm households for sometime. This article examines whether the 1996 change has affected the off-farm labor participation of farm households. We conclude that the observed increase in off-farm participation of farm operators who received payments was not the result of the 1996 policy change. Government payments, whether coupled or decoupled, have a negative effect on off-farm labor participation.     

Family Composition and Off-Farm Participation Decisions in Israeli Farm Households

This article studies the relationship between the off-farm participation behavior of farm operators and their spouses and the demographic composition of the household. We focus on farm families without parents, siblings or partners, and examine the effects of the existence of elderly children of the farm couple. We find that both the father and the mother tend to reduce their participation in off-farm work as the number of elderly children rises. This result holds even after controlling for observed characteristics. We also find that the effect of elderly children stems from considerations related to both farm production and household production.     

The Theory of the Farm Household: An Application to Saskatchewan

A theoretical model is presented which integrates the consumption and production components of the rural household. A theoretically determined system of expenditure equations, derived factor demand equations and an off-farm labor supply equation are estimated using primary data for Saskatchewan farm households. From the empirical results we conclude that if the wage rate can be observed or estimated, the farm household's behavior can be explained empirically in a manner consistent with received theory. Summary and Conclusions A theoretical model integrating the consumption and production sides of the farm household or enterprise is estimated empirically using primary data for Saskatchewan farm households. The farm household was assumed to maximize its utility function subject to farm production and cash flow constraints. The empirical results indicate that the theoretical model can be estimated successfully even when data are sparse. While the coefficients for the expenditure, derived demand, and off-farm labor supply equations are consistent with coefficients from similar equations estimated separately by others, the theoretically more precise integrated approach specifies the simultaneous effect of the variables across equations. From the empirical results and the theoretical considerations it is obvious that the wage rate is a key explanatory variable in the model. The wage rate links the three components of the model–final expenditures, the derived input demands and off-farm labor hours. The wage rate is one determinant of the allocation of the operator's time (although other factors such as the nature of the operation and opportunities to work off-farm dominated in this study), and both the wage rate and the allocation of the time determine the eventual income available to the rural household. In essence, then, the problem of explaining farm household behavior when the household's business enterprise function cannot be separated from its consumption activity is similar to that of traditional models based on the theory of the firm and models of consumer behavior. The only difference is that the wage rate is observable in the traditional models but needs to be estimated as a shadow price in models which seek to explain rural household behavior. As a result, research in this area must start with an explanation of the allocation of (at least) the operator's labor and a measure of the shadow wage rate. If the entire household's allocation of time between on-farm and off-farm labor and leisure is determined, it is possible to treat its consumption and production activities separately. Further research is required to extend the model to explain household labor supply to both the farm and off-farm labor markets.     

Fertilizer Use, Risk, and Off-Farm Labor Markets in the Semi-Arid Tropics of India

A two-period model is developed in which a risk-averse farmer uses off-farm labor to smooth consumption, leading to greater use of fertilizer. Fertilizer demand is shown to increase with the depth of the off-farm labor market. Controlling for exogenous weather risk, farmers use more fertilizer the lower the unemployment rate and the higher the share of nonagricultural work in total off-farm labor. The results suggest that off-farm labor markets and own-farm production may be complementary in risky production environments, so that policies which promote the depth of the off-farm labor market in low-income areas may also bolster farm productivity.     

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.     

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.     

Off-farm Labour Supply with Productivity Increases,Peak Period Production and Farm Structure Impacts

The study of of-farm employment of farm family members in the context of a neoclassical time allocation model of labor supply is used to attempt to explain the amount and type of off-farm employment currently prevalent on the Canadian Prairies. The effect of labor saving technical change together with a production process characterized by periods of peak activity affect the priority that may be assigned to off-farm work These factors require explicit consideration in the theoretical framework for the study of off-farm employment. The refinements occasioned by expanding the paradigm in this manner have implications for the role of rural development policy in the support of the agricultural sector     

Parametric and Semiparametric Modeling of the Off-Farm Labor Supply of Agrarian Households in Transition Bulgaria

The reaction of labor markets to economic reforms is an important indicator of the progress of transition. Because of diminished government support and the breakup of state and collective enterprises, labor market adjustments in the transition economies have been particularly severe in the agricultural sector. This article evaluates the off-farm labor market for a sample of agrarian households in transition Bulgaria. We give particular attention to the distributional assumptions that underlie standard approaches to the evaluation of labor supply. A variety of specification tests are considered and support for standard maximum likelihood estimates which rely on normality as a maintained hypothesis is mixed. Alternative semiparametric (distribution-free) estimators are also considered. The empirical results indicate that, five years after the initiation of the transition, off-farm labor supply patterns for Bulgarian agricultural households are similar to what is commonly observed in developed market economies. Labor supply is positively affected by factors such as education and work experience which are hypothesized to increase off-farm wages. Social benefit programs providing monetary or in-kind support payments are shown to significantly decrease off-farm work.     

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.     

Nonpecuniary Benefits to Farming: Implications for Supply Response to Decoupled Payments

We develop a household model wherein farmers allocate labor to maximize utility from leisure, consumption, and nonpecuniary benefits from farming. The model shows that farmers with decreasing marginal utility of income respond to higher decoupled payments by decreasing off-farm labor and increasing farm labor, resulting in greater agricultural output. We then estimate the difference between farm and off-farm returns to labor using data from three nationally representative farm household surveys. The finding of a large on-farm/off-farm wage differential provides compelling evidence of substantial nonpecuniary benefits from farming.     

PLURIACTIVITY,FARM STRUCTURES AND RURAL CHANGE

This paper begins by looking at some of the reasons why farm household pluriactivity, although long-standing, has now become a phenomenon of interest to European policymakers. This European concern is then compared with the current interest of UK policymakers and academics in the related concept of farm diversification. In many respects, UK policies differ significantly from those in the rest of Europe, most notably in their neglect of off-farm income-earning opportunities, and the reasons for this are discussed. Furthermore, it is argued that a preoccupation with forms of diversification or pluriactivity is likely to be less helpful analytically than a focus on underlying farm business and farm household strategies. Finally, some preliminary results of empirical work in Devon and Grampian are presented which suggest that farm household strategies may be at variance with prior expectations in some respects.     

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.