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Off-farm income and farm capital accumulation: a farm-level analysis


  • Carl J. Lagerkvist
  • Karin Larsen
  • Kent D. Olson


An intertemporal model in which farm capital accumulation and work choices by a single-agent farm household are interdependent is developed and tested using a farm-level data set. Estimation is done using a recursive two-step simultaneous censored equations model. The results of this study are of relevance for an understanding of structural change within the agricultural sector as they point toward the emergence of a dual farming structure and rigidity in off-farm work adjustments. Our findings suggest that off farm income reliance is associated with a farm asset disinvestment strategy, that there is rigidity in off farm income reliance, and that factors explaining farm capital growth indirectly affect the off farm reliance.

Suggested Citation

  • Carl J. Lagerkvist & Karin Larsen & Kent D. Olson, 2007. "Off-farm income and farm capital accumulation: a farm-level analysis," Agricultural Finance Review, Emerald Group Publishing, vol. 67(2), pages 241-257, November.
  • Handle: RePEc:eme:afrpps:v:67:y:2007:i:2:p:241-257

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    Cited by:

    1. Ji, Yueqing & Yu, Xiaohua & Zhong, Funing, 2012. "Machinery investment decision and off-farm employment in rural China," China Economic Review, Elsevier, vol. 23(1), pages 71-80.
    2. Myyrä, Sami, & Pietola, Kyosti & Heikkilä, Anna-Maija, 2011. "Farm Level Capital: Capital positions, structures, the dynamics of farm level investments, capital accumulation and leverage positions," Factor Markets Working Papers 105, Centre for European Policy Studies.


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