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Estimating permanent income and wealth of the US farm households

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  • Ashok Kumar Mishra
  • Krishna Paudel

Abstract

Farm households are unique in the way they derive income when compared to nonfarm households. Farm operators and spouses have dual income sources, from farm and off-farm activities. Further, farm households on an average possess higher wealth than nonfarm households. This article estimates permanent income for the US farm households using data from a large national farm level survey. The estimated income is then used to identify the determinants of wealth accumulation by the US farm households. Results confirm that permanent income is closely related to age of the operator, education, occupation, farm size, location and number of earners in the household. Along with age, permanent income is a significant determinant of household wealth. It was also found that the wealth-income curve is nonlinear, upward sloping, and convex. Hausman's specification test indicates that variations in farm household wealth is better explained by estimated permanent income than observed total household income. Off-farm income cannot be treated as residual or transitory income.

Suggested Citation

  • Ashok Kumar Mishra & Krishna Paudel, 2011. "Estimating permanent income and wealth of the US farm households," Applied Economics, Taylor & Francis Journals, vol. 43(12), pages 1521-1533.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:12:p:1521-1533
    DOI: 10.1080/00036840802600582
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    Cited by:

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    2. Ashok K. Mishra & Kh. A. Mottaleb & Samarendu Mohanty, 2015. "Impact of off-farm income on food expenditures in rural Bangladesh: an unconditional quantile regression approach," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 139-148, March.
    3. Radosław PASTUSIAK & Magdalena JASINIAK & Michał SOLIWODA & Joanna STAWSKA, 2017. "What may determine off-farm income? A review," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(8), pages 380-391.
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    5. Frederick Quaye, 2016. "Effects of Multiple Risks on Farm Income and Willingness to Pay for Agricultural Insurance: A Case Study of the Greater Accra Region in Ghana," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(6), pages 1-1, June.
    6. Pastusiak, Radosław & Jasiniak, Magdalena & Stawska, Joanna & Soliwoda, Michał, 2017. "Znaczenie dochodów pozarolniczych w gospodarstwach rolnych Kanady i USA," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 1(174).
    7. Damania, Richard & Joshi, Anupam & Russ, Jason, 2020. "India’s forests – Stepping stone or millstone for the poor?," World Development, Elsevier, vol. 125(C).
    8. Kiichi Tokuoka, 2015. "Do Consumers Learn from Their Own Experiences?," The Japanese Economic Review, Japanese Economic Association, vol. 66(4), pages 466-491, December.
    9. Stefano Ciliberti & Angelo Frascarelli, 2018. "The CAP 2013 reform of direct payments: redistributive effects and impacts on farm income concentration in Italy," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-18, December.

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