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Off-Farm Labor Supply Responses To Permanent And Transitory Farm Income

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  • Kwon, Chul-Woo
  • Orazem, Peter F.
  • Otto, Daniel M.

Abstract

A sample of Iowa farm couples is used to evaluate whether off-farm labor supply decisions respond to permanent and transitory components of farm income. Off-farm labor supply of both spouses declines in response to increases in permanent farm income. Farm wives also reduce off-farm labor supply in response to positive transitory farm income shocks. Consequently, one mechanism farm households use to smooth their goods consumption when facing fluctuating farm income is to modify their consumption of leisure. Ability to smooth goods consumption does not imply the absence of liquidity constraints among farm households unless leisure consumption is also smoothed.

Suggested Citation

  • Kwon, Chul-Woo & Orazem, Peter F. & Otto, Daniel M., 2003. "Off-Farm Labor Supply Responses To Permanent And Transitory Farm Income," Working Papers 18225, Iowa State University, Department of Economics.
  • Handle: RePEc:ags:genres:18225
    DOI: 10.22004/ag.econ.18225
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    2. Shrestha, Sundar S. & Findeis, Jill L., 2005. "Space, Government Payments, and Off-Farm Labor Response of Principal Farm Operators: A County-Level Analysis," 2005 Annual meeting, July 24-27, Providence, RI 19511, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    5. Robbins Michael W., 2014. "The Utility of Nonparametric Transformations for Imputation of Survey Data," Journal of Official Statistics, Sciendo, vol. 30(4), pages 1-26, December.
    6. Sena Durguner, 2018. "Variations in farm consumption and their relationship to income: an empirical investigation of Illinois farm households," Applied Economics, Taylor & Francis Journals, vol. 50(9), pages 990-1005, February.
    7. Latruffe, Laure & Mann, Stefan, 2009. "Another look at the distribution of direct payments: The link with part-time farming," Working Papers 210395, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    8. Kosec, Katrina & Song, Jie & Zhao, Hongdi & Holtemeyer, Brian, 2021. "The Gendered Impact of Income Fluctuations on Household Departure, Labor Supply, and Human Capital Decisions," 2021 Conference, August 17-31, 2021, Virtual 315094, International Association of Agricultural Economists.
    9. Zhao, Jianmei & Zhang, Jun, 2012. "Credit Constraint and Non-separable Behavior of Rural Households — Evidence from China," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123950, Agricultural and Applied Economics Association.
    10. Wang, Dazhe & Qian, Wenrong & Guo, Xiaolin, 2019. "Gains and losses: Does farmland acquisition harm farmers’ welfare?," Land Use Policy, Elsevier, vol. 86(C), pages 78-90.
    11. 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.
    12. Lisa Pfeiffer & Alejandro López‐Feldman & J. Edward Taylor, 2009. "Is off‐farm income reforming the farm? Evidence from Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 125-138, March.
    13. Foltz, Jeremy D. & Aldana, Ursula, 2006. "Off-Farm Work and On-Farm Investment," 2006 Annual meeting, July 23-26, Long Beach, CA 21185, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    15. Chang, Yang-Ming & Huang, Biing-Wen & Chen, Yun-Ju, 2012. "Labor supply, income, and welfare of the farm household," Labour Economics, Elsevier, vol. 19(3), pages 427-437.

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