Off-Farm Labor Supply Responses to Permanent and Transitory Farm Income
AbstractA sample of Iowa farm couples is used to evaluate whether off-farm labor supply decisions respond to permanent and transitory components of farm income. Off-farm labor supply of both spouses declines in response to increases in permanent farm income. Farm wives also reduce off-farm labor supply in response to positive transitory farm income shocks. Consequently, one mechanism farm households use to smooth their goods consumption when facing fluctuating farm income is to modify their consumption of leisure. Ability to smooth goods consumption does not imply the absence of liquidity constraints among farm households unless leisure consumption is also smoothed. Key Words: Frisch equations, off-farm labor, farm income, transitory shocks, permanent shocks
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 10643.
Date of creation: 18 Jul 2003
Date of revision:
Publication status: Published in Agricultural Economics, January 2006, vol. 34 no. 1, pp. 59-68
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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Web page: http://www.econ.iastate.edu
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Other versions of this item:
- Chul-Woo Kwon & Peter F. Orazem & Daniel M. Otto, 2006. "Off-farm labor supply responses to permanent and transitory farm income," Agricultural Economics, International Association of Agricultural Economists, vol. 34(1), pages 59-67, 01.
- NEP-AGR-2003-07-29 (Agricultural Economics)
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