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“Internal Instability" of Peasant Households: A Further Analysis of the de Janvry, Fafchamps, and Sadoulet Model

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  • Sonoda, Tadashi

Abstract

Based on the model by de Janvry, Fafchamps, and Sadoulet (1991), this study gives a two-step interpretation to response of the shadow or internal prices in a peasant household model with missing markets for both food and labor. In the first step, changes in exogenous variables have initial effects on the internal prices of food and labor in their respective “internal markets". In the second step, these effects are combined through interactions between the internal markets that are caused by cross-price effects between food and labor. Response of the internal prices under the two missing markets can be thought of as resulting from these interactions. This interpretation, as well as the sensitivity analysis based on it, reveals not only how the marked “internal instability" (or sharp fluctuation of the perceived scarcity) of food and labor arises but also which assumptions are crucial to produce it in the simulation analysis of de Janvry et al.

Suggested Citation

  • Sonoda, Tadashi, 2004. "“Internal Instability" of Peasant Households: A Further Analysis of the de Janvry, Fafchamps, and Sadoulet Model," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 6, pages 1-12.
    • Handle: RePEc:ags:jpjjre:242153
    DOI: 10.22004/ag.econ.242153
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    References listed on IDEAS

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    1. Lawrence J. Lau & Pan A. Yotopoulos, 1972. "Profit, Supply, and Factor Demand Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(1), pages 11-18.
    2. Kuroda, Yoshimi & Yotopoulos, Pan A., 1978. "A Microeconomic Analysis of Production Behavior of the Farm Household in Japan ‐A Profit Function Approach," Economic Review, Hitotsubashi University, vol. 29(2), pages 116-129, April.
    3. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-1417, November.
    4. Tadashi Sonoda & Yoshihiro Maruyama, 1999. "Effects of the Internal Wage on Output Supply: A Structural Estimation for Japanese Rice Farmers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 131-143.
    5. de Janvry, Alain & Fafchamps, M. & Sadoulet, Elisabeth, 1991. "Peasant Household Behavior with Missing Markets: Some Paradoxes Explain," CUDARE Working Papers 198579, University of California, Berkeley, Department of Agricultural and Resource Economics.
    6. 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.
    7. Besley, Timothy J, 1988. "Rationing, Income Effects and Supply Response: A Theoretical Note," Oxford Economic Papers, Oxford University Press, vol. 40(2), pages 378-389, June.
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    Cited by:

    1. Tsuda, Shunsuke, 2022. "Refugee inflows, surplus farm labor, and crop marketization in rural Africa," Journal of Development Economics, Elsevier, vol. 155(C).

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