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Off-Farm Work Decisions of Farmers Over the Life Cycle: Evidence from Panel Data

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  • Kimhi, Ayal

Abstract

One of the main questions regarding the phenomenon of part-time farming is whether it is a stable situation or a temporary stage before quitting farming altogether. A conclusion may be reached by examining the structural state dependence of farmers' discrete choices regarding off-farm work over time. A dynamic programming model of utility maximization in which current work decisions affect future utility is developed, and an estimation strategy based on the Hotz-Miller Multinomial Logit framework for panel data is suggested. The model is estimated using Israeli census-panel data and the hypothesis that state dependence is not important is strongly rejected. In particular, the results indicate that farmers choose to work off the farm if it leads to lower prospects of a future exit. Hence, it may be concluded that Israeli farmers do not see the off-farm work option as a step on the way out of agriculture, but rather as a preferred long-run choice in combination with farming.

Suggested Citation

  • Kimhi, Ayal, 1996. "Off-Farm Work Decisions of Farmers Over the Life Cycle: Evidence from Panel Data," Working Papers 232798, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
    • Handle: RePEc:ags:huaewp:232798
    DOI: 10.22004/ag.econ.232798
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    References listed on IDEAS

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    Cited by:

    1. Ayal Kimhi & Ramon Lopez, 1999. "A Note on Farmers' Retirement and Succession Considerations: Evidence from a Household Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(1), pages 154-162, January.
    2. Kimhi, Ayal & Bollman, Ray, 1999. "Family farm dynamics in Canada and Israel: the case of farm exits," Agricultural Economics, Blackwell, vol. 21(1), pages 69-79, August.

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