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Labor supply, income, and welfare of the farm household

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  • Chang, Yang-Ming
  • Huang, Biing-Wen
  • Chen, Yun-Ju

Abstract

Considering family labor and hired labor as heterogeneous inputs, we present a theoretical framework in which the optimal decisions of a farm household on on-farm family and hired labor, off-farm labor supply, and leisure are determined uniquely and endogenously. Focusing on two alternative settings with and without off-farm employment constraints, we show that imperfect substitutability between family labor and hired labor is not critical to the separation of household production and consumption. The validity of the separation proposition is shown to depend crucially on whether or not the availability of off-farm job opportunities is limited. We further examine how changes in external economic conditions and government policies affect the time allocation decisions of the household, as well as the composition of household income (i.e., on-farm income and off-farm labor earnings).

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 19 (2012)
Issue (Month): 3 ()
Pages: 427-437

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Handle: RePEc:eee:labeco:v:19:y:2012:i:3:p:427-437

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Web page: http://www.elsevier.com/locate/labeco

Related research

Keywords: Off-farm labor supply; Family and hired labor; Off-farm employment constraints;

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References

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Cited by:
  1. Eleonora Matteazzi & Martina Menon & Federico Perali, 2013. "An Equilibrium Analysis of a Collective Farm-Household Model: Policy and Welfare Simulations," Working Papers 20/2013, University of Verona, Department of Economics.

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