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Does Gibrat's Law Hold Amongst Dairy Farmers in Northern Ireland?

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  • Kostov, Philip
  • Patton, Myles
  • Moss, Joan E.
  • McErlean, Seamus

Abstract

This paper tests whether the Law of Proportionate Effects (Gibrat, 1931), which states that farms grow at a rate that is independent of their size, holds for the dairy farms in Northern Ireland. Previous studies have tended to concentrate on testing whether the law holds for all farms. The methodology used in this study permits investigation of whether the law holds for some farms or all farms according to their size. The approach used avoids the subjective splitting of samples, which tends to bias results. The finding shows that the Gibrat law does hold except in the case of small farms. This is in accordance with previous findings that Gibrat's law tends to hold when only larger farms are considered, but tends to fail when smaller farms are included in the analysis. Implications and further extensions, as well as some alternatives to the proposed methodology are discussed.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24775.

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Date of creation: 2005
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Handle: RePEc:ags:eaae05:24775

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Keywords: Gibrat's law; quantile regression; sample selection bias; Integrated Conditional Moments test; Agricultural and Food Policy; C12; C14; O49; Q19;

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Citations

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Cited by:
  1. Kimhi, Ayal & Tzur, Nitzan, 2011. "Long-Run Trends in the Farm Size Distribution in Israel: The Role of Part-Time Farming," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114759, European Association of Agricultural Economists.
  2. Landi, Chiara & Stefani, Gianluca & Rocchi, Benedetto & Lombardi, Ginevra V. & Giampaolo, Sabina, 2013. "Determinants of Structural Change in the agricultural sector: An Empirical Analysis of Farm Exit in Tuscany," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149893, Italian Association of Agricultural and Applied Economics (AIEAA).
  3. Almuhanad Melhim & Erik J. O'Donoghue & C. Richard Shumway, 2008. "Do the Largest Firms Grow and Diversify the Fastest? The Case of U.S. Dairies," Working Papers 2008-7, School of Economic Sciences, Washington State University.
  4. Dolev, Yuval & Kimhi, Ayal, 2008. "Does Farm Size Really Converge? The Role of Unobserved Farm Efficiency," Discussion Papers 45778, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  5. Brenes Munoz, T. & Lakner, Sebastian & Brummer, Bernhard, 2012. "Economic growth of farms: An empirical analysis on organic farming," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126756, International Association of Agricultural Economists.
  6. Dolev, Yuval & Kimhi, Ayal, 2006. "Survival And Growth Of Family Farms In Israel: 1971-1995," Discussion Papers 7146, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  7. Munoz, Brenes T. & Lakner, Sebastian & Brummer, Bernhard, 2011. "Determinants of Economic Growth in Organic Farming: The Case of Bavaria and Baden-Wuerttemberg," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114270, European Association of Agricultural Economists.
  8. Huettel, Silke & Jongeneel, Roelof A., 2008. "Structural Change in the Dairy Sectors of Germany and The Netherlands - A Markov Chain Analysis," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43659, European Association of Agricultural Economists.
  9. Zimmermann, Andrea & Heckelei, Thomas, 2012. "Differences of farm structural change across European regions," Discussion Papers 162879, University of Bonn, Institute for Food and Resource Economics.
  10. Dolev, Yuval & Kimhi, Ayal, 2010. "Do family farms really converge to a uniform size? The role of unobserved farm efficiency," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), March.
  11. Fertő, Imre & Bakucs, Lajos Zoltán, 2008. "Érvényes-e a Gibrat-törvény a magyar mezőgazdaságban?
    [Is Gibrat s law valid for Hungarian agriculture?]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 25-38.

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