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Risk and farm operator labour supply

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Author Info

  • Nigel Key
  • Michael Roberts
  • Erik O'Donoghue

Abstract

This study uses a large increase in US Federal crop insurance subsidies as a natural experiment to identify the importance of risk for farm operator labour supply. Subsidy increases induced greater crop insurance coverage, which in turn reduced farmers' financial risks. Crop insurance participation data are merged with farm-level Census of Agriculture data from 1992 and 1997 to compare how individuals' off-farm labour supply changed in response to the policy-induced change in insurance coverage. The empirical approach controls for unobserved heterogeneity and accounts for the censored nature of the data. It is found that greater insurance coverage reduces the off-farm labour supply of operators who produced at least $100 000 of output, and increased the labour supply of small-farm operators who produced less than $25 000 of output.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840500369043
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 38 (2006)
Issue (Month): 5 ()
Pages: 573-586

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Handle: RePEc:taf:applec:v:38:y:2006:i:5:p:573-586

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Cited by:
  1. Sylvie Démurger & Haiyuan Wan, 2012. "Payments for Ecological Restoration and Internal Migration in China: The Sloping Land Conversion Program in Ningxia," Working Papers 1233, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.

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