Survival And Growth Of Family Farms In Israel: 1971-1995
We analyze the growth of family farms in Israeli cooperative villages between 1981 and 1995, using longitudinal data. We use instrumental variable techniques to account for the endogeneity of initial farm size, and correct for selectivity due to farm survival. Both endegeneity and sample selection are found important in this case. We find that smaller farms grow faster, so that there is convergence of farm sizes at the bottom end of the size distribution. There is weak evidence that this convergence process slows down at the upper part of the size distribution. We also find a positive effect of farm specialization on growth, indicating the possibility of scale economies. Farm capital stock affects farm survival but not growth itself, once accounting for selectivity due to survival. Farm growth is faster in larger farm households, indicating that family labor is important even when farms become more commercialized.
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