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Human capital, entrepreneurship, and farm household earnings

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Listed author(s):
  • Yang, Dennis Tao
  • An, Mark Yuying

Abstract

Farm households in modern environments engage in multiple productive activities. In this paper we formulate and estimate a profit maximization model in which human capital enhances earnings through both activity-specific effects and across-activity factor allocation. Our purpose is to decompose these contributions. The model is estimated using Chinese household data that contain detailed activity information. We find that schooling and experience improve the allocation of family-supplied inputs between agricultural and non-agricultural uses, counting for 46 percent of their total returns. The evidence suggests that studies ignoring activity choice could substantially undervalue the role of human capital in development.

(This abstract was borrowed from another version of this item.)

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Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 68 (2002)
Issue (Month): 1 (June)
Pages: 65-88

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Handle: RePEc:eee:deveco:v:68:y:2002:i:1:p:65-88
Contact details of provider: Web page: http://www.elsevier.com/locate/devec

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Find related papers by JEL classification:
  • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
  • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
  • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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  1. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
  2. Huffman, Wallace E, 1980. "Farm and Off-Farm Work Decisions: The Role of Human Capital," The Review of Economics and Statistics, MIT Press, vol. 62(1), pages 14-23, February.
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  4. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
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  6. Dennis Tao Yang, 1997. "Education in Production: Measuring Labor Quality and Management," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 764-772.
  7. Pitt, Mark M & Sumodiningrat, Gunawan, 1991. "Risk, Schooling and the Choice of Seed Technology in Developing Countries: A Meta-Profit Function Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(2), pages 457-473, May.
  8. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023 Elsevier.
  9. J. Edward Taylor & Antonio Yunez-Naude, 2000. "The Returns from Schooling in a Diversified Rural Economy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 287-297.
  10. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September.
  11. Yang, Dennis Tao, 1997. "Education and Off-Farm Work," Economic Development and Cultural Change, University of Chicago Press, vol. 45(3), pages 613-632, April.
  12. Schultz, T. Paul, 1988. "Education investments and returns," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 13, pages 543-630 Elsevier.
  13. Yotopoulos, Pan A & Lau, Lawrence J, 1973. "A Test for Relative Economic Efficiency: Some Further Results," American Economic Review, American Economic Association, vol. 63(1), pages 214-223, March.
  14. C. Richard Shumway & Rulon D. Pope & Elizabeth K. Nash, 1984. "Allocatable Fixed Inputs and Jointness in Agricultural Production: Implications for Economic Modeling," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(1), pages 72-78.
  15. Schmidt, Peter & Knox Lovell, C. A., 1979. "Estimating technical and allocative inefficiency relative to stochastic production and cost frontiers," Journal of Econometrics, Elsevier, vol. 9(3), pages 343-366, February.
  16. Phillips, Joseph M, 1994. "Farmer Education and Farmer Efficiency: A Meta-Analysis," Economic Development and Cultural Change, University of Chicago Press, vol. 43(1), pages 149-165, October.
  17. Mark R. Rosenzweig, 1980. "Neoclassical Theory and the Optimizing Peasant: An Econometric Analysis of Market Family Labor Supply in a Developing Country," The Quarterly Journal of Economics, Oxford University Press, vol. 94(1), pages 31-55.
  18. Behrman, Jere R. & Deolalikar, Anil B., 1988. "Health and nutrition," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 14, pages 631-711 Elsevier.
  19. Hymer, Stephen H & Resnick, Stephen, 1969. "A Model of an Agrarian Economy with Nonagricultural Activities," American Economic Review, American Economic Association, vol. 59(4), pages 493-506, Part I Se.
  20. Wallace E. Huffman, 1977. "Allocative Efficiency: The Role of Human Capital," The Quarterly Journal of Economics, Oxford University Press, vol. 91(1), pages 59-79.
  21. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
  22. Wim P. M. Vijverberg, 1993. "Educational Investments and Returns for Women and Men in Côte d'Ivoire," Journal of Human Resources, University of Wisconsin Press, vol. 28(4), pages 933-974.
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