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The Effect of National Policies and Labor Market on Land Use Decisions in Developing Countries: An Application of Maximum Simulated Likelihood to System of Censored Acreages with Panel Data

Author

Listed:
  • Bayou Demeke

    (University of Wisconsin-Madison)

  • Ian Coxhead

    (University of Wisconsin-Madison)

Abstract

This paper estimates land use responses of households to relative output prices and wages, using panel data from the Philippines. We present multi-output profit maximizing model to elicit the role of relative prices on land allocation between crops and fallowing. We estimate systems of random effects Tobit acreage equations using maximum simulated likelihood technique. The results show that rising return to labor and management intensive crop reduces land expansion. In addition rising wages also reduce agricultural expansion. The results reveal a potential role for market based policies in shaping environmental outcomes in developing countries.

Suggested Citation

  • Bayou Demeke & Ian Coxhead, 2005. "The Effect of National Policies and Labor Market on Land Use Decisions in Developing Countries: An Application of Maximum Simulated Likelihood to System of Censored Acreages with Panel Data," Others 0503007, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpot:0503007
    Note: Type of Document - pdf; pages: 37
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    References listed on IDEAS

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    More about this item

    Keywords

    Land Use; Maximum Simulated Likelihood; Panel Data; Tobit; Philippines;
    All these keywords.

    JEL classification:

    • P - Political Economy and Comparative Economic Systems
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Z - Other Special Topics

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