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Calculating shadow wages for family labour in agriculture : An analysis for Spanish citrus fruit farms

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Author Info

  • Andrés J. Picazo-Tadeo

    ()
    (Universitat de València, Dpto. Economía Aplicada II, Avda dels Tarongers s/n., 46022 Valencia Spain)

  • Ernest Reig-Martínez

    (Universitat de València and Instituto Valenciano de Investigaciones Económicas, Guardia Civil, 22, 46020 Valencia Spain)

Abstract

This paper deals with the calculation of shadow wages for family labour in agriculture. Using the existence of a duality between input distance and cost functions, we use the former to derive individual labour shadow prices for a sample of Spanish citrus fruit producers. Our results show that the average shadow price representing the opportunity cost of family labour employed onfarm, is lower than the average market wage rate paid for hired labour. We relate this finding to a strategy of outsourcing of many growing tasks that is currently pursued by farmers to overcome the problems posed by a suboptimal farm size.

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Bibliographic Info

Article provided by INRA Department of Economics in its journal Cahiers d'Economie et Sociologie Rurales.

Volume (Year): 75 (2005)
Issue (Month): ()
Pages: 5-21

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Handle: RePEc:rae:jouces:v:75:y:2005:i::p:5-21

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Related research

Keywords: shadow prices; duality; distance functions; on-farm labour opportunity cost; outsourcing;

References

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  1. Reig-Martinez, Ernest & Picazo-Tadeo, Andres J., 2004. "Analysing farming systems with Data Envelopment Analysis: citrus farming in Spain," Agricultural Systems, Elsevier, vol. 82(1), pages 17-30, October.
  2. Madior Fall & Thierry Magnac, 2004. "How Valuable Is On-Farm Work to Farmers?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 267-281.
  3. Hailu, Atakelty & Veeman, Terrence S., 2000. "Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 251-274, November.
  4. Francesc Hernández Sancho & Andrés Picazo & Ernest Reig Martínez, 1999. "- Shadow Prices And Distance Functions: An Analysis For Firms Of The Spanish Ceramic Pavements Industry," Working Papers. Serie EC 1999-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Coggins, Jay S. & Swinton, John R., 1996. "The Price of Pollution: A Dual Approach to Valuing SO2Allowances," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 58-72, January.
  6. 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.
  7. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  8. Schmitt, Gunther, 1991. "Why Is the Agriculture of Advanced Western Economies Still Organized by Family Farms? Will This Continue to Be So in the Future?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 18(3-4), pages 443-58.
  9. Isabelle Piot-Lepetit & Dominique Vermersch, 1998. "Pricing Organic Nitrogen Under The Weak Disposability Assumption: An Application to the French Pig Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(1), pages 85-99.
  10. Jacobsen, S. E., 1972. "On Shephard's duality theorem," Journal of Economic Theory, Elsevier, vol. 4(3), pages 458-464, June.
  11. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
  12. Fare, Rolf & Grosskopf, Shawna, 1990. "A distance function approach to price efficiency," Journal of Public Economics, Elsevier, vol. 43(1), pages 123-126, October.
  13. Elhorst, J Paul, 1994. "Firm-Household Interrelationships on Dutch Dairy Farms," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 21(2), pages 259-76.
  14. Andres Picazo-Tadeo & Ernest Reig-Martinez, 2006. "Agricultural externalities and environmental regulation: evaluating good practice in citrus production," Applied Economics, Taylor & Francis Journals, vol. 38(11), pages 1327-1334.
  15. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, vol. 19(1), pages 150-162, October.
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Cited by:
  1. Mercedes Beltrán-Esteve & Andrés J. Picazo-Tadeo & Ernest Reig-Martínez, 2012. "What makes a citrus farmer go organic? Empirical evidence from Spanish citrus farming," Working Papers 1205, Department of Applied Economics II, Universidad de Valencia.

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