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The Relation Between Farm Production Risk And Off-Farm Income

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  • Kyle, Steven C.

Abstract

This paper presents a model of the farm labor allocation decision based on risk and return characteristics of different activities. It is shown that off-farm employment can play an important role in the diversification of farm family income, implying that portfolio models of risk and return to farm activities should take into account the possibility of off-farm employment. A model of the labor allocation decision based on the risk and return characteristics of each activity is developed and tested using a state level cross section of the United States over the post-war period, and performs well in explaining variation in reliance on off-farm income.

Suggested Citation

  • Kyle, Steven C., 1993. "The Relation Between Farm Production Risk And Off-Farm Income," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 22(2), pages 1-10, October.
    • Handle: RePEc:ags:arerjl:31553
    DOI: 10.22004/ag.econ.31553
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    References listed on IDEAS

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    1. Huffman, Wallace E, 1980. "Farm and Off-Farm Work Decisions: The Role of Human Capital," The Review of Economics and Statistics, MIT Press, vol. 62(1), pages 14-23, February.
    2. Tauer, Loren W., 1990. "How Diversified Is Your State's Agriculture," Staff Papers 121537, Cornell University, Department of Applied Economics and Management.
    3. Brian W. Gould & William E. Saupe, 1989. "Off-Farm Labor Market Entry and Exit," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 960-969.
    4. Helen H. Jensen & Priscilla Salant, 1985. "The Role of Fringe Benefits in Operator Off-Farm Labor Supply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(5), pages 1095-1099.
    5. Lucier, Gary & Chesley, Agnes & Ahearn, Mary Clare, 1986. "Farm Income Data: A Historical Perspective," Statistical Bulletin 154593, United States Department of Agriculture, Economic Research Service.
    6. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    7. Streeter, Deborah H. & Saupe, William E., 1986. "Nonmonetary Considerations in Farm Operator Labor Allocations," Research Bulletins 183677, Cornell University, Department of Applied Economics and Management.
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    Cited by:

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    2. Beal, Diana J., 1996. "Emerging Issues in Risk Management in Farm Firms," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 64(03), pages 1-12, December.
    3. Sauer, Johannes & Finger, Robert, 2014. "Climate Risk Management Strategies in Agriculture – The Case of Flood Risk," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 172679, Agricultural and Applied Economics Association.

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