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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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  • 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.

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File URL: http://128.118.178.162/eps/othr/papers/0503/0503007.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Others with number 0503007.

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

Note: Type of Document - pdf; pages: 37
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Web page: http://128.118.178.162

Related research

Keywords: Land Use; Maximum Simulated Likelihood; Panel Data; Tobit; Philippines;

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References

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  1. Ian COXHEAD, 1996. "Induced Innovation And Land Degradation In Developing Country Agriculture," Staff Papers 398, University of Wisconsin Madison, AAE.
  2. Holt, Matthew T., 1999. "A Linear Approximate Acreage Allocation Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
  3. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
  4. 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, May.
  5. Moore, Michael R. & Negri, Donald H., 1992. "A Multicrop Production Model Of Irrigated Agriculture, Applied To Water Allocation Policy Of The Bureau Of Reclamation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(01), July.
  6. 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.
  7. Feder, Gershon, 1985. "The relation between farm size and farm productivity : The role of family labor, supervision and credit constraints," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 297-313, August.
  8. Luojia Hu, 2002. "Estimation of a Censored Dynamic Panel Data Model," Econometrica, Econometric Society, vol. 70(6), pages 2499-2517, November.
  9. Ian Coxhead & Agnes Rola & Kwansoo Kim, 2001. "How Do National Markets and Price Policies Affect Land Use at the Forest Margin? Evidence from the Philippines," Land Economics, University of Wisconsin Press, vol. 77(2), pages 250-267.
  10. 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.
  11. Coyle, Barry T., 1993. "On Modeling Systems Of Crop Acreage Demands," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), July.
  12. 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, May.
  13. Raghbendra Jha & John Whalley, 2001. "The Environmental Regime in Developing Countries," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 217-250 National Bureau of Economic Research, Inc.
  14. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-98, June.
  15. 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.
  16. 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, May.
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