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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

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Author Info
Bayou Demeke (University of Wisconsin-Madison)
Ian Coxhead (University of Wisconsin-Madison)

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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.

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File URL: http://129.3.20.41/eps/othr/papers/0503/0503007.pdf
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Paper provided by EconWPA in its series Others with number 0503007.

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Length: 37 pages
Date of creation: 14 Mar 2005
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Handle: RePEc:wpa:wuwpot:0503007

Note: Type of Document - pdf; pages: 37
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Web page: http://129.3.20.41

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Related research
Keywords: Land Use Maximum Simulated Likelihood Panel Data Tobit Philippines

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Find related papers by JEL classification:
P - Economic Systems
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
Z - Other Special Topics

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. IAN COXHEAD & Agnes Rola, 1999. "Do National Markets and Price Policies Affect Land Use at the Forest Margin? Evidence from the Philippines," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 426, Wisconsin-Madison Agricultural and Applied Economics Department. [Downloadable!]
  2. Luojia Hu, 2002. "Estimation of a Censored Dynamic Panel Data Model," Econometrica, Econometric Society, vol. 70(6), pages 2499-2517, November. [Downloadable!] (restricted)
  3. Raghbendra Jha & John Whalley, 1999. "The Environmental Regime in Developing Countries," NBER Working Papers 7305, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Ian Coxhead, 1996. "Induced Innovation and Land Degradation in Developing Country Agriculture," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 398, Wisconsin-Madison Agricultural and Applied Economics Department. [Downloadable!]
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  5. Coxhead, Ian & Shively, Gerald & Shuai, Xiaobing, 2002. "Development policies, resource constraints, and agricultural expansion on the Philippine land frontier," Environment and Development Economics, Cambridge University Press, vol. 7(02), pages 341-363, April. [Downloadable!]
  6. Shively, Gerald & Pagiola, Stefano, 2004. "Agricultural intensification, local labor markets, and deforestation in the Philippines," Environment and Development Economics, Cambridge University Press, vol. 9(02), pages 241-266, April. [Downloadable!]
  7. Rodr Guez-Meza, Jorge & Southgate, Douglas & Gonz Lez-Vega, Claudio, 2004. "Rural poverty, household responses to shocks, and agricultural land use: panel results for El Salvador," Environment and Development Economics, Cambridge University Press, vol. 9(02), pages 225-239, April. [Downloadable!]
  8. Carter, Michael R & Yao, Yang, 2002. " Local versus Global Separability in Agricultural Household Models: The Factor Price Equalization Effect of Land Transfer Rights," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 84(3), pages 702-15, August. [Downloadable!] (restricted)
  9. Gourieroux, Christian & Monfort, Alain, 1993. "Simulation-based inference : A survey with special reference to panel data models," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 5-33, September. [Downloadable!] (restricted)
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