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Off-farm Income and Investments in Farm Assets: A Double Hurdle Approach

  • Harris, James Michael
  • Blank, Steven C.
  • Erickson, Kenneth W.
  • Hallahan, Charles B.

The farm household structure is a complex set of inter-relationships between and among a variety of internal and external factors involving consumption, investment, and income-earning activities. In this paper we use ARMS data to explore the contribution of off-farm income to the viability of the farm business. We focus on the link between off-farm income and farm investment and whether off-farm income drives on-farm investment. The results indicate the importance of farm characteristics such as type, size, and location on the probability of investment but lead us to reject the hypothesis that off farm income is driving farm investment. Further research will be needed to further unweave some of the complex relationships involved in the farm household structure. Keywords: Farm investments, off-farm income, double hurdle

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File URL: http://purl.umn.edu/61531
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Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61531.

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Date of creation: 2010
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Handle: RePEc:ags:aaea10:61531
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