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

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  • Nigel Key
  • Michael J. Roberts

Abstract

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. Copyright 2009, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.1467-8276.2008.01180.x
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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 91 (2009)
Issue (Month): 1 ()
Pages: 1-18

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Handle: RePEc:oup:ajagec:v:91:y:2009:i:1:p:1-18

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Cited by:
  1. Zier, Patrick, 2013. "Econometric impact assessment of the Common Agricultural Policy in East German agriculture," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 71, number 71.
  2. Stefan Mann & Henry Wüstemann, 2010. "Efficiency and utility: an evolutionary perspective," International Journal of Social Economics, Emerald Group Publishing, vol. 37(9), pages 676-685, September.
  3. Rabotyagov, Sergey S. & Lin, Sonja, 2013. "Small forest landowner preferences for working forest conservation contract attributes: A case of Washington State, USA," Journal of Forest Economics, Elsevier, vol. 19(3), pages 307-330.
  4. Tocco, Barbara & Bailey, Alastair & Davidova, Sophia, 2013. "Determinants to Leave Agriculture and Change Occupational Sector: Evidence from an Enlarged EU," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152324, International Agricultural Trade Research Consortium.
  5. Carpentier, Alain & Gohin, Alexandre & Heinzel, Christoph, 2012. "Production Effects of Direct Payments to Active Farmers: a Microeconomic Dynamic and Stochastic Analysis," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122447, European Association of Agricultural Economists.
  6. Li, Feng & Hendrikse, George W.J., 2009. "CEO Compensation in Cooperatives versus Publicly Listed Firms," 2009 Conference, August 16-22, 2009, Beijing, China 51619, International Association of Agricultural Economists.
  7. Howley, Peter & Breen, James & Donoghue, Cathal O. & Hennessy, Thia, 2012. "Does the single farm payment affect farmers’ behaviour? A macro and micro analysis," International Journal of Agricultural Management, Institute of Agricultural Management & International Farm Management Association, vol. 2(1), October.
  8. Bhaskar, Arathi & Beghin, John C., 2007. "How Coupled Are Decoupled Farm Payments? A Review of the Evidence," Staff General Research Papers 12841, Iowa State University, Department of Economics.
  9. Marian Rizov & Jan Pokrivcak & Pavel Ciaian, 2013. "CAP Subsidies and Productivity of the EU Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 537-557, 09.
  10. Margarian, Anne, 2010. "Nachbarschafts- Und Konjunktureffekte: Zur Aufgabewahrscheinlichkeit Landwirtschaftlicher Betriebe," 50st Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93961, German Association of Agricultural Economists (GEWISOLA).
  11. Brady, Michael P. & Marsh, Thomas L., 2013. "Do Changes in Orchard Supply Occur at the Intensive or Extensive Margin of the Landowner?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150452, Agricultural and Applied Economics Association.
  12. Peter Howley & Trevor Donnellan & Kevin Hanrahan, 2009. "The 2003 CAP reform: Do decoupled payments affect agricultural production?," Working Papers 0901, Rural Economy and Development Programme,Teagasc.
  13. Peter Howley & Trevor Donnellan & Kevin Hanrahan, 2009. "Cap reform: implications for Ireland," Working Papers 0904, Rural Economy and Development Programme,Teagasc.
  14. El-Osta, Hisham S., 2011. "The Impact of Human Capital on Farm Operator Household Income," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(1), April.
  15. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.
  16. Rizov, Marian & Pokrivcak, Jan & Ciaian, Pavel, 2013. "CAP Subsidies and the Productivity of EU Farms," Factor Markets Working Papers 148, Centre for European Policy Studies.
  17. Roeder, Norbert & Lederbogen, Dirk & Trautner, Juergen & Bergamini, Ariel & Stofer, Silvia & Scheidegger, Christoph, 2010. "The impact of changing agricultural policies on jointly used rough pastures in the Bavarian Pre-Alps: An economic and ecological scenario approach," Ecological Economics, Elsevier, vol. 69(12), pages 2435-2447, October.

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