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Household Income Volatility in U.S. Farm Households

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  • Key, Nigel
  • Prager, Daniel
  • Burns, Christopher

Abstract

Farm households are subject to several sources of income instability, including yield and production fluctuations, disasters such as droughts or disease, input and output price changes, and varying levels of off-farm income. This paper assesses the income variability of households operating family farms in the continental United States. We find that income volatility varies between farm household subgroups, such as farm size, commodity specialization, and geographic location and that volatility has decreased between 1998 and 2010. Regression analysis shows that households operating crop farms, larger farms, and more highly leveraged farms have higher levels of volatility. Finally, we decompose the sources of income variance and analyze the role of federal agricultural program payments in reducing volatility.

Suggested Citation

  • Key, Nigel & Prager, Daniel & Burns, Christopher, 2015. "Household Income Volatility in U.S. Farm Households," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205407, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea15:205407
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    File URL: http://ageconsearch.umn.edu/record/205407/files/Key_%20Prager_%20Burns%20-%202015%20-%20AAEA%20Conference%20Paper%20-%20Income%20Volatility.pdf
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    References listed on IDEAS

    as
    1. Kenneth Poon & Alfons Weersink, 2011. "Factors affecting variability in farm and off-farm income," Agricultural Finance Review, Emerald Group Publishing, vol. 71(3), pages 379-397, November.
    2. Purdy, Barry M. & Langemeier, Michael R. & Featherstone, Allen M., 1997. "Financial Performance, Risk, And Specialization," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 0(Number 1), pages 1-13, July.
    3. Ziliak, James P. & Hardy, Bradley & Bollinger, Christopher, 2011. "Earnings volatility in America: Evidence from matched CPS," Labour Economics, Elsevier, vol. 18(6), pages 742-754.
    4. Enjolras, Geoffroy & Capitanio, Fabian & Aubert, Magali & Adinolfi, Felice, 2012. "Direct payments, crop insurance and the volatility of farm income. Some evidence in France and in Italy," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122478, European Association of Agricultural Economists.
    5. 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.
    6. Key, Nigel D. & Roberts, Michael J., 2007. "Do Government Payments Influence Farm Size and Survival?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 2), pages 1-19, August.
    7. Bradley Hardy & James P. Ziliak, 2014. "Decomposing Trends In Income Volatility: The “Wild Ride” At The Top And Bottom," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 459-476, January.
    8. Mishra, Ashok K. & El-Osta, Hisham S., 2005. "Decomposition of Variability in Farm Household Assets and Debt," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 0(Number 2), pages 1-20.
    9. Ashok K. Mishra & Carmen L. Sandretto, 2002. "Stability of Farm Income and the Role of Nonfarm Income in U.S. Agriculture," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(1), pages 208-221.
    10. Nigel Key & Michael J. Roberts, 2006. "Government Payments and Farm Business Survival," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 382-392.
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    More about this item

    Keywords

    Agricultural and Food Policy; Consumer/Household Economics; Risk and Uncertainty;

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