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Testing for Separability in Household Models with Heterogeneous Behavior: A Mixture Model Approach

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Author Info

  • Vakis, Renos
  • Sadoulet, Elisabeth
  • de Janvry, Alain
  • Cafiero, Carlo

Abstract

Knowing whether a household behaves according to separability or non-separability is needed for the correct modeling of production decisions. We propose a superior test to those found in the literature on separability by using a mixture distribution approach to estimate the probability that a farm household behaves according to non-separability, and test that the determinants of consumption affect production decisions for households categorized as non-separable. With non-separability attributed to labor market constraints, the switcher equation shows that Peruvian farm households that are indigenous and young, with low levels of education, and lack of local employment opportunities are more likely to be constrained on the labor market.

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Bibliographic Info

Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt4hs3g5dj.

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Date of creation: 01 Aug 2004
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Handle: RePEc:cdl:agrebk:qt4hs3g5dj

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Keywords: labor; separability; mixture distributions; Peru;

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References

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  1. Michael R. Carter & Pedro Olinto, 2003. "Getting Institutions “Right” for Whom? Credit Constraints and the Impact of Property Rights on the Quantity and Composition of Investment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 173-186.
  2. 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.
  3. Michael R. Carter & Yang Yao, 2002. "Local versus Global Separability in Agricultural Household Models: The Factor Price Equalization Effect of Land Transfer Rights," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 702-715.
  4. Grimard, Franque, 2000. "Rural Labor Markets, Household Composition, and Rainfall in Cote d'Ivoire," Review of Development Economics, Wiley Blackwell, vol. 4(1), pages 70-86, February.
  5. Kiefer, Nicholas M, 1978. "Discrete Parameter Variation: Efficient Estimation of a Switching Regression Model," Econometrica, Econometric Society, vol. 46(2), pages 427-34, March.
  6. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-98, June.
  7. Lopez, Ramon E., 1984. "Estimating labor supply and production decisions of self-employed farm producers," European Economic Review, Elsevier, vol. 24(1), pages 61-82.
  8. Anjana Bhattacharyya & Subal C. Kumbhakar, 1997. "Market Imperfections and Output Loss in the Presence of Expenditure Constraint: A Generalized Shadow Price Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 860-871.
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Citations

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Cited by:
  1. Greenwell C MATCHAYA & Pius CHILONDA, 2012. "Estimating Effects Of Constraints On Food Security In Malawi: Policy Lessons From Regressions Quantiles," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(2).
  2. Harris, James Michael & Blank, Steven C. & Erickson, Kenneth W. & Hallahan, Charles B., 2010. "Off-farm Income and Investments in Farm Assets: A Double Hurdle Approach," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61531, Agricultural and Applied Economics Association.
  3. repec:hal:wpaper:halshs-00452809 is not listed on IDEAS
  4. Useche, Pilar & Blare, Trent, 2012. "Seeds of Gold: How Environmental Considerations Influence Cacao Production Decisions for Small Landholder Households in Northwestern Ecuador," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124738, Agricultural and Applied Economics Association.
  5. Stefania Lovo, 2012. "Market imperfections, liquidity, and farm household labor allocation: the case of rural South Africa," Agricultural Economics, International Association of Agricultural Economists, vol. 43(4), pages 417-428, 07.
  6. Jia, Xiangping & Buchenrieder, Gertrud, 2007. "Documentation of a multi-topic questionnaire-based survey on sustainable resource use in rural China," IAMO Discussion Papers 102, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
  7. Useche, Pilar & Blare, Trent, 2013. "Traditional vs. modern production systems: Price and nonmarket considerations of cacao producers in Northern Ecuador," Ecological Economics, Elsevier, vol. 93(C), pages 1-10.

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