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Off-Farm Work Decisions of Farm Couples: Estimating Structural Simultaneous Equations with Ordered Categorical Dependent Variables

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  • Ayal Kimhi
  • Myoung-jae Lee

Abstract

We estimate a full system of structural farm and off-farm labor supply equations of farm couples as a set of simultaneous equations with categorical dependent variables. In a first step, the reduced form is estimated by ordered probit with unknown thresholds. Then, the identified structural coefficients are recovered from the reduced-form coefficients through minimum distance estimation. Using census data from Israel, we find that for men, a one-hour increase in farm labor supply causes a one-hour decrease in off-farm labor supply, but not for women. This could not have been found without estimating structural coefficients. Copyright 1996, Oxford University Press.

Suggested Citation

  • Ayal Kimhi & Myoung-jae Lee, 1996. "Off-Farm Work Decisions of Farm Couples: Estimating Structural Simultaneous Equations with Ordered Categorical Dependent Variables," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 687-698.
    • Handle: RePEc:oup:ajagec:v:78:y:1996:i:3:p:687-698
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    Cited by:

    1. Aurélie Darpeix & Céline Bignebat & Philippe Perrier-Cornet, 2014. "Demand for Seasonal Wage Labour in Agriculture: What Does Family Farming Hide?," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(1), pages 257-272, January.
    2. Bjornsen, Hild-Marte, 1999. "Off-farm labour decisions of Norwegian farm Households," ERSA conference papers ersa99pa025, European Regional Science Association.
    3. Nikolaj Malchow-Møller & Michael Svarer, 2005. "Wage - labour activities by agricultural households in Nicaragua," Journal of Development Studies, Taylor & Francis Journals, vol. 41(7), pages 1221-1246.
    4. Athanasios P. Papadopoulos & Gregory T. Papanikos, 2005. "The determinants of vinegrowers employment and policy implications: the case of a Greek island," Agricultural Economics, International Association of Agricultural Economists, vol. 32(1), pages 61-72, January.
    5. Catherine Benjamin & Ayal Kimhi, 2006. "Farm work, off-farm work, and hired farm labour: estimating a discrete-choice model of French farm couples' labour decisions," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(2), pages 149-171, June.
    6. Ayal Kimhi, 2004. "Family Composition and Off-Farm Participation Decisions in Israeli Farm Households," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 502-512.
    7. Marcel Fafchamps & Agnes R. Quisumbing, 1999. "Human Capital, Productivity, and Labor Allocation in Rural Pakistan," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 369-406.
    8. Laszlo, Sonia, 2008. "Education, Labor Supply, and Market Development in Rural Peru," World Development, Elsevier, vol. 36(11), pages 2421-2439, November.
    9. Hisham S. El-Osta & Ashok K. Mishra & Mitchell J. Morehart, 2008. "Off-Farm Labor Participation Decisions of Married Farm Couples and the Role of Government Payments," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(2), pages 311-332.
    10. Paolisso, Michael J. & Hallman, Kelly & Haddad, Lawrence James & Regmi, Shibesh, 2001. "Does cash crop adoption detract from childcare provision?," FCND briefs 109, International Food Policy Research Institute (IFPRI).
    11. Ayal Kimhi, 2003. "Family Composition and Off-Farm Participation Decisions in Israeli Farm Households," Labor and Demography 0307001, University Library of Munich, Germany.
    12. Drall, Anviksha & Mandal, Sabuj Kumar, 2021. "Investigating the existence of entry barriers in rural non-farm sector (RNFS) employment in India: A theoretical modelling and an empirical analysis," World Development, Elsevier, vol. 141(C).
    13. Blank, Steven C., 2005. "Hedging with off-farm income: implications for production and investment decisions across farm sizes," 2005 Annual Meeting, July 6-8, 2005, San Francisco, California 291741, Western Agricultural Economics Association.
    14. Ramsey, A. Ford & Sonoda, Tadashi & Ko, Minkyong, 2021. "Aggregation and Threshold Models of Intersectoral Labor Migration: Evidence from the United States and Japan," 2021 Conference, August 17-31, 2021, Virtual 315110, International Association of Agricultural Economists.
    15. Eduardo Ramírez & William Foster, 2003. "Análisis de la Oferta de Mano de Obra Familiar en la Agricultura Campesina," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(119), pages 89-110.
    16. Woldehanna, Tassew & Lansink, Alfons Oude & Peerlings, Jack, 2000. "Off-farm work decisions on Dutch cash crop farms and the 1992 and Agenda 2000 CAP reforms," Agricultural Economics, Blackwell, vol. 22(2), pages 163-171, March.
    17. Changhui Kang & Myoung-jae Lee, 2014. "Estimation of Binary Response Models With Endogenous Regressors," Pacific Economic Review, Wiley Blackwell, vol. 19(4), pages 502-530, October.
    18. Rathmann, C. & Glauben, T. & Loy, J.-P., 2006. "Arbeitsmarktpartizipation landwirtschaftlicher Haushalte: eine empirische Analyse für Schleswig-Holstein," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 41, March.

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