IDEAS home Printed from https://ideas.repec.org/p/ags/aaea12/124742.html
   My bibliography  Save this paper

Off-farm Employment and Farming Efficiency in Modern Agriculture: A Dynamic Panel Analysis

Author

Listed:
  • Bjornsen, Hild-Marte
  • Mishra, Ashok K.

Abstract

Most of the empirical literature in this area tends to analyze labor allocation decisions of economic agents using cross-sectional data. But such methods implicitly assume that model parameters are stable (constant) across firms and over time. The use of cross-sectional methods is therefore glaringly at odds with the firm-specific aspects of the theoretical models employed in labor economics. Using a large panel data this study investigates the simultaneous relationship between farming efficiency and the off-farm labor supply decisions of both farm operators and their spouses. We also account for unobserved heterogeneity and correcting for simultaneity bias in such estimation. Results reveal several interesting findings. First, farming efficiency (ratio of farm revenue to total variable cost) has a positive and negative impact on hours of off-farm work by farm operators and spouses, respectively. Second, agricultural subsidy has a negative and positive effect on off-farm work hours of farm operators and spouses, respectively. Finally, we find a dynamic relationship between off-farm labor supply and farming efficiency. Specifically, in the case of the farm operator, off-farm work first increases farming efficiency in the first period and then decreases it in the second period. On the other hand, we observe a positive correlation, for both periods, between off-farm hours worked by spouses and farming efficiency.

Suggested Citation

  • Bjornsen, Hild-Marte & Mishra, Ashok K., 2012. "Off-farm Employment and Farming Efficiency in Modern Agriculture: A Dynamic Panel Analysis," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124742, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea12:124742
    DOI: 10.22004/ag.econ.124742
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/124742/files/Bj_rnsen.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.124742?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. E. Phimister & D. Roberts, 2006. "The Effect of Off-farm Work on the Intensity of Agricultural Production," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(4), pages 493-515, August.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    3. Ashok K. Mishra & Barry K. Goodwin, 1997. "Farm Income Variability and the Supply of Off-Farm Labor," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 880-887.
    4. Babatunde, Raphael O. & Qaim, Matin, 2010. "Impact of off-farm income on food security and nutrition in Nigeria," Food Policy, Elsevier, vol. 35(4), pages 303-311, August.
    5. Dewbre, Joe & Mishra, Ashok K., 2007. "Impact of Program Payments on Time Allocation and Farm Household Income," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(3), pages 1-17, December.
    6. Kalwij, Adriaan S., 2003. "A maximum likelihood estimator based on first differences for a panel data Tobit model with individual specific effects," Economics Letters, Elsevier, vol. 81(2), pages 165-172, November.
    7. Chang, Hung-Hao & Mishra, Ashok K. & Livingston, Michael, 2011. "Agricultural policy and its impact on fuel usage: Empirical evidence from farm household analysis," Applied Energy, Elsevier, vol. 88(1), pages 348-353, January.
    8. Maddala,G. S., 1986. "Limited-Dependent and Qualitative Variables in Econometrics," Cambridge Books, Cambridge University Press, number 9780521338257, November.
    9. James Heckman, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    10. Glauben, Thomas & Herzfeld, Thomas & Wang, Xiaobing, 2005. "Labor Market Participation of Chinese Agricultural Households," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24516, European Association of Agricultural Economists.
    11. Avner Ahituv & Ayal Kimhi, 2006. "Simultaneous estimation of work choices and the level of farm activity using panel data," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(1), pages 49-71, March.
    12. Ashok Mishra & Barry Goodwin, 1998. "Income risk and allocation of labour time: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1549-1555.
    13. Joe Dewbre, 2006. "The Impact of Coupled and Decoupled Government Subsidies on Off-Farm Labor Participation of U.S. Farm Operators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 393-408.
    14. Chang, Hung-Hao & Mishra, Ashok, 2008. "Impact of off-farm labor supply on food expenditures of the farm household," Food Policy, Elsevier, vol. 33(6), pages 657-664, December.
    15. Hisham El-Osta & Ashok Mishra & Mary Ahearn, 2004. "Labor Supply by Farm Operators Under “Decoupled” Farm Program Payments," Review of Economics of the Household, Springer, vol. 2(4), pages 367-385, August.
    16. Nelson, Forrest & Olson, Lawrence, 1978. "Specification and Estimation of a Simultaneous-Equation Model with Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 695-709, October.
    17. Barry K. Goodwin & Ashok K. Mishra, 2004. "Farming Efficiency and the Determinants of Multiple Job Holding by Farm Operators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 722-729.
    18. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, vol. 26(4), pages 315-331, August.
    19. Robinson, Chris, 1989. "The Joint Determination of Union Status and Union Wage Effects: Some Tests of Alternative Models," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 639-667, June.
    20. Glauben, Thomas & Herzfeld, Thomas & Wang, Xiaobing, 2008. "Labor market participation of Chinese agricultural households: Empirical evidence from Zhejiang province," Food Policy, Elsevier, vol. 33(4), pages 329-340, August.
    21. Weiss, Christoph R, 1997. "Do They Come Back Again? The Symmetry and Reversibility of Off-Farm Employment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(1), pages 65-84.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dierk Schmid & Swetlana Renner & Daniel Hoop, 2023. "Exploring within- and between-effects of the factors influencing off-farm work decisions in Switzerland," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(10), pages 416-425.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mishra, Ashok K. & Chang, Hung-Hao, 2012. "Can off farm employment affect the privatization of social safety net? The case of self-employed farm households," Food Policy, Elsevier, vol. 37(1), pages 94-101.
    2. Jeffrey Gillespie & Ashok Mishra, 2011. "Off‐farm employment and reasons for entering farming as determinants of production enterprise selection in US agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 411-428, July.
    3. Abdul-Salam, Yakubu & Roberts, Deborah, "undated". "Determinants of off-farm work and its effect on agricultural input intensity," 92nd Annual Conference, April 16-18, 2018, Warwick University, Coventry, UK 273486, Agricultural Economics Society.
    4. Chintawar, Sachin & Mishra, Ashok K. & Gillespie, Jeffrey M., "undated". "The Impact of Adoption of Genetically Modified Corn on the Off-Farm Labor Supply in the United States," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46832, Southern Agricultural Economics Association.
    5. Corsi, Alessandro & Salvioni, Cristina, . "Once part-timer always part-timer? Causes for persistence in off farm work state of farmers," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 6(2).
    6. Raimondi, Valentina & Curzi, Daniele & Bertoni, Danilo & Olper, Alessandro, "undated". "Off-farm Labour Decision of Italian Farm Operators," Working papers 157120, Factor Markets, Centre for European Policy Studies.
    7. Lien, Gudbrand D. & Kumbhakar, Subal C. & Hardaker, J. Brian, 2008. "Determinants Of Part-Time Farming And Its Effect On Farm Productivity And Efficiency," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6701, European Association of Agricultural Economists.
    8. Ghimire, Raju & Huang, Wen-Chi & Shrestha, Rudra Bahadur, 2014. "Factors Affecting Nonfarm Income Diversification among Rural Farm Households in Central Nepal," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 4(2), April.
    9. Chang, Hung-Hao & Mishra, Ashok K. & Livingston, Michael, 2011. "Agricultural policy and its impact on fuel usage: Empirical evidence from farm household analysis," Applied Energy, Elsevier, vol. 88(1), pages 348-353, January.
    10. Chang, Hung-Hao & Mishra, Ashok, 2008. "Impact of off-farm labor supply on food expenditures of the farm household," Food Policy, Elsevier, vol. 33(6), pages 657-664, December.
    11. Mishra, Ashok K. & Villacis, Alexis H. & Miller, Cristina D. M., 2022. "Market Facilitation Program Payments, Employer-Sponsored Health Insurance Coverage and Off-Farm Employment," IZA Discussion Papers 15834, Institute of Labor Economics (IZA).
    12. Joo, Hyunjeong & Mishra, Ashok K., 2013. "Labor Supply and Food Consumption Behavior of Farm Households: Evidence from South Korea," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150420, Agricultural and Applied Economics Association.
    13. Wang, Xiaobing, 2007. "Labor market behavior of Chinese rural households during transition," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 42, number 92321.
    14. Pandit, Mahesh & Paudel, Krishna P. & Mishra, Ashok K., 2013. "Do Agricultural Subsidies Affect the Labor Allocation Decision? Comparing Parametric and Semiparametric Methods," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(01), pages 1-18, April.
    15. Mishra, Ashok K. & Paudel, Krishna P., 2008. "Policy Reform and Off-farm Labor Supply by Operators in the Delta Region: A," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6725, Southern Agricultural Economics Association.
    16. Peter Howley & Emma Dillon & Thia Hennessy, 2014. "It’s not all about the money: understanding farmers’ labor allocation choices," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 31(2), pages 261-271, June.
    17. Dierk Schmid & Swetlana Renner & Daniel Hoop, 2023. "Exploring within- and between-effects of the factors influencing off-farm work decisions in Switzerland," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(10), pages 416-425.
    18. Bojnec, Stefan & Ferto, Imre, 2011. "Impact of Off-farm Income on Farm Efficiency in Slovenia," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114258, European Association of Agricultural Economists.
    19. Olper, Alessandro & Raimondi, Valentina & Cavicchioli, Daniele & Vigani, Mauro, 2011. "Does Common Agricultural Policy Reduce Farm Labour Migration? A Panel Data Analysis Across EU Regions," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114597, European Association of Agricultural Economists.
    20. Chang, Hung-Hao & Boisvert, Richard N., "undated". "Does Participation in the Conservation Reserve Program and/or Off-Farm Work Affect the Level and Distribution of Farm Household Income?," Working Papers 57035, Cornell University, Department of Applied Economics and Management.

    More about this item

    Keywords

    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea12:124742. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.