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The Impact of Extension Services on Farm Level Outcomes: An Instrumental Variable Approach

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  • Cawley, A.P
  • Heanue, K.
  • O’Donoghue, C.
  • Sheehan, M.

Abstract

Many studies show that interaction with extension services impact farmer’s technology adoption decisions and profitability levels. However, analysis of extension impact across all farm systems whilst controlling for endogeneity biases is less common. This research attempts to redress that research gap by firstly discussing the various biases related to the motivation to engage with extension services, omitted variable bias and measurement error, and subsequently applying instrumental variable (IV) regression estimation to the relationship between extension engagement and farm level outcomes, namely family farm income over a pooled panel dataset. Distance to the local advisory office and the introduction of a policy change were chosen as valid and relevant instruments. The results indicate a positive impact of extension engagement on farm income, and imply that an ordinary least squares approach underestimates the benefits of extension engagement. Accordingly, increased advisory activity could improve the performance of the sector significantly, and this could be a useful policy tool to achieve the targets as set out by the Irish governments Food Wise 2025 plan.

Suggested Citation

  • Cawley, A.P & Heanue, K. & O’Donoghue, C. & Sheehan, M., 2015. "The Impact of Extension Services on Farm Level Outcomes: An Instrumental Variable Approach," 150th Seminar, October 22-23, 2015, Edinburgh, Scotland 212664, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa150:212664
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    File URL: http://ageconsearch.umn.edu/record/212664/files/The%20Impact%20of%20Extension%20Services%20on%20Farm%20Level%20Outcomes%20An%20Instrumental%20Variable%20Approach.pdf
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    References listed on IDEAS

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    1. Hunt, Warren & Birch, Colin & Vanclay, Frank & Coutts, Jeff, 2014. "Recommendations arising from an analysis of changes to the Australian agricultural research, development and extension system," Food Policy, Elsevier, vol. 44(C), pages 129-141.
    2. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    3. Birkhaeuser, Dean & Evenson, Robert E & Feder, Gershon, 1991. "The Economic Impact of Agricultural Extension: A Review," Economic Development and Cultural Change, University of Chicago Press, vol. 39(3), pages 607-650, April.
    4. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-529, October.
    5. Peter Howley & Stephen O Neill & Rowland Atkinson, 2015. "Who Needs Good Neighbors?," Environment and Planning A, , vol. 47(4), pages 939-956, April.
    6. Michael P. Murray, 2006. "Avoiding Invalid Instruments and Coping with Weak Instruments," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 111-132, Fall.
    7. Jock R. Anderson, 2004. "Agricultural Extension: Good Intentions and Hard Realities," World Bank Research Observer, World Bank Group, vol. 19(1), pages 41-60.
    8. Wang, Sun Ling, 2014. "Cooperative Extension System: Trends and Economic Impacts on U.S. Agriculture," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 29(1), pages 1-8.
    9. Mario Coccia, 2008. "Spatial mobility of knowledge transfer and absorptive capacity: analysis and measurement of the impact within the geoeconomic space," The Journal of Technology Transfer, Springer, vol. 33(1), pages 105-122, February.
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    1. repec:eee:forpol:v:99:y:2019:i:c:p:77-82 is not listed on IDEAS

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    Keywords

    Agricultural and Food Policy;

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