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Labor supply, income, and welfare of the farm household

Author

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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).

Suggested Citation

  • Chang, Yang-Ming & Huang, Biing-Wen & Chen, Yun-Ju, 2012. "Labor supply, income, and welfare of the farm household," Labour Economics, Elsevier, vol. 19(3), pages 427-437.
    • Handle: RePEc:eee:labeco:v:19:y:2012:i:3:p:427-437
    DOI: 10.1016/j.labeco.2012.03.004
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    9. Laura Barasa & Bethuel K. Kinuthia & Abdelkrim Araar & Stephene Maende & Faith Mariera, 2023. "Nonfarm entrepreneurship, crop output, and household welfare in Tanzania: An exploration of transmission channels," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 762-792, July.
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    More about this item

    Keywords

    Off-farm labor supply; Family and hired labor; Off-farm employment constraints;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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