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Estimating labor supply of farm households under nonseparability: empirical evidence from Nepal

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  • Abdulai, Awudu
  • Regmi, Punya Prasad

Abstract

This paper examines the labor supply of farm households in Nepal using a recently developed methodology that accounts for the simultaneity between production and consumption decisions of the households. Estimates of marginal products of male and female labor or shadow wages are obtained from an agricultural production function. An instrumental variable approach is then used to recover the household's structural labor supply from variations in the shadow wages and income, as well as other household characteristics. The findings reveal that both male and female total labor supply are sensitive to changes in shadow wages and income. Human capital embodied in education is found to exert a significant positive effect on output, but has no statistically significant impact on total labor supply of individuals. The results also rejects the existence of efficient labor markets in rural Nepal. © 2000 Elsevier Science B.V. All rights reserved.

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Bibliographic Info

Article provided by Blackwell in its journal Agricultural Economics.

Volume (Year): 22 (2000)
Issue (Month): 3 (April)
Pages: 309-320

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Handle: RePEc:eee:agecon:v:22:y:2000:i:3:p:309-320

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References

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  1. Heckman, James J, 1993. "What Has Been Learned about Labor Supply in the Past Twenty Years?," American Economic Review, American Economic Association, vol. 83(2), pages 116-21, May.
  2. Jacoby, Hanan G., 1991. "Productivity of men and women and the sexual division of labor in peasant agriculture of the Peruvian Sierra," Journal of Development Economics, Elsevier, vol. 37(1-2), pages 265-287, November.
  3. Jacoby, H.G., 1990. "Shadow Wages And Peasant Family Labor Supply; An Econometric Application To The Peruvian Sierra," Papers 73, World Bank - Living Standards Measurement.
  4. Barnum, Howard N. & Squire, Lyn, 1979. "An econometric application of the theory of the farm-household," Journal of Development Economics, Elsevier, vol. 6(1), pages 79-102, February.
  5. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  6. 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.
  7. Rosenzweig, Mark R, 1980. "Neoclassical Theory and the Optimizing Peasant: An Econometric Analysis of Market Family Labor Supply in a Developing Country," The Quarterly Journal of Economics, MIT Press, vol. 94(1), pages 31-55, February.
  8. Abdulai, Awudu & Huffman, Wallace, 2000. "Structural Adjustment and Economic Efficiency of Rice Farmers in Northern Ghana," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 503-20, April.
  9. Awudu Abdulai & Christopher L. Delgado, 1999. "Determinants of Nonfarm Earnings of Farm-Based Husbands and Wives in Northern Ghana," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 117-130.
  10. Lopez, Ramon E., 1984. "Estimating labor supply and production decisions of self-employed farm producers," European Economic Review, Elsevier, vol. 24(1), pages 61-82.
  11. Bardhan, Pranab K, 1979. "Wages and Unemployment in a Poor Agrarian Economy: A Theoretical and Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 479-500, June.
  12. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
  13. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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Citations

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Cited by:
  1. Luca Tiberti & Marco Tiberti, 2012. "Rural Policies and Poverty in Tanzania: an Agricultural Household Model-Based Assessment," Cahiers de recherche 1229, CIRPEE.
  2. Wassie Berhanu & David Colman & Bichaka Fayissa, 2008. "Diversification and Livelihood Sustainability in a Semi-Arid Environment: A Case Study from Southern Ethiopia," Working Papers 200806, Middle Tennessee State University, Department of Economics and Finance.
  3. Thapa, Sridhar, 2007. "The relationship between farm size and productivity: empirical evidence from the Nepalese mid-hills," 106th Seminar, October 25-27, 2007, Montpellier, France 7940, European Association of Agricultural Economists.
  4. Shively, Gerald E. & Pagiola, Stefano, 2001. "Poverty, Agricultural Development, And The Environment: Evidence From A Frontier Region Of The Philippines," 2001 Annual meeting, August 5-8, Chicago, IL 20532, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Pieter Serneels, 2002. "The Added Worker Effect and Intrahousehold Aspects of Unemployment," Economics Series Working Papers WPS/2002-14, University of Oxford, Department of Economics.
  6. Bagamba, Fred & Burger, Kees & Kuyvenhoven, Arie, 2009. "Determinant of smallholder farmer labor allocation decisions in Uganda:," IFPRI discussion papers 887, International Food Policy Research Institute (IFPRI).
  7. Rakhshanda, Kousar & Awudu, Abdulai, 2013. "Impacts of rural non-farm employment on household welfare in Pakistan," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149890, Italian Association of Agricultural and Applied Economics (AIEAA).
  8. Abdulai, Awudu & CroleRees, Anna, 2001. "Determinants of income diversification amongst rural households in Southern Mali," Food Policy, Elsevier, vol. 26(4), pages 437-452, August.
  9. Thapa, Sridhar, 2008. "Gender differentials in agricultural productivity: evidence from Nepalese household data," MPRA Paper 13722, University Library of Munich, Germany, revised Feb 2009.
  10. Terry Sicular & Yaohui Zhao, 2002. "Earnings and Labor Mobility in Rural China: Implications for China's WTO Entry," University of Western Ontario, Economic Policy Research Institute Working Papers 20028, University of Western Ontario, Economic Policy Research Institute.
  11. Linde-Rahr, Martin, 2001. "Rural Shadow Wages, Labour Supply And Agricultural Production Under Imperfect Markets: Empirical Evidence From Viet Nam," 2001 Annual meeting, August 5-8, Chicago, IL 20487, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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