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Is off-farm income reforming the farm? Evidence from Mexico

Listed author(s):
  • Lisa Pfeiffer
  • Alejandro López-Feldman
  • J. Edward Taylor

Does access to off-farm income complement or compete with agricultural production? This article explores the effect of off-farm income on agricultural production activities, using data from the 2003 Mexico National Rural Household Survey. We first discuss the theoretical conditions under which access to off-farm income may influence production in an agricultural household model. Instrumental-variable (IV) estimation methods are then used to test whether agricultural production activities, technologies, and input use differ between households with and without access to off-farm income. We find that off-farm income has a negative effect on agricultural output and the use of family labor on the farm, but a positive impact on the demand for purchased inputs. There is also a slight efficiency gain in households with access to off-farm income. Findings offer insights into how household production evolves as rural households increasingly engage in off-farm income activities. Copyright (c) 2009 International Association of Agricultural Economists.

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Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 40 (2009)
Issue (Month): 2 (March)
Pages: 125-138

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Handle: RePEc:bla:agecon:v:40:y:2009:i:2:p:125-138
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