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Human capital, entrepreneurship, and farm household earnings

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  • 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.
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Suggested Citation

  • Yang, Dennis Tao & An, Mark Yuying, 2002. "Human capital, entrepreneurship, and farm household earnings," Journal of Development Economics, Elsevier, vol. 68(1), pages 65-88, June.
    • Handle: RePEc:eee:deveco:v:68:y:2002:i:1:p:65-88
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    More about this item

    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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