IDEAS home Printed from https://ideas.repec.org/p/crt/wpaper/2001.html
   My bibliography  Save this paper

Farm and Non-Farm Labor Decisions and Household Efficiency

Author

Listed:
  • Dimitris Christopoulos
  • Margarita Genius

    (Department of Economics, University of Crete, Greece)

  • Vangelis Tzouvelekas

    (Department of Economics, University of Crete, Greece)

Abstract

This paper develops a theoretical framework for modeling farm households' joint production and consumption decisions in the presence of technical inefficiency. Following Lopez (1984), a household model where farmers display different preferences between on-farm and off-farm labor is adopted while their production activity can be subject to technical inefficiency. The presence of technical inefficiency does not only lead to the inability of farmers to achieve maximal output but it will also affect the consumption allocation and the household's labor supply decisions through its effect on both income and on the shadow price of on-farm labor, leading to overall household inefficiency.

Suggested Citation

  • Dimitris Christopoulos & Margarita Genius & Vangelis Tzouvelekas, 2020. "Farm and Non-Farm Labor Decisions and Household Efficiency," Working Papers 2001, University of Crete, Department of Economics.
  • Handle: RePEc:crt:wpaper:2001
    as

    Download full text from publisher

    File URL: https://economics.soc.uoc.gr/wpa/docs/2001.pdf
    File Function: First version
    Download Restriction: No
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Diana Fletschner, 2008. "Women's Access to Credit: Does It Matter for Household Efficiency?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 669-683.
    2. Jean-Paul Chavas & Ragan Petrie & Michael Roth, 2005. "Farm Household Production Efficiency: Evidence from The Gambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 160-179.
    3. Hung‐Hao Chang & Fang‐I Wen, 2011. "Off‐farm work, technical efficiency, and rice production risk in Taiwan," Agricultural Economics, International Association of Agricultural Economists, vol. 42(2), pages 269-278, March.
    4. Stefania Lovo, 2011. "Pension Transfers and farm household technical efficiency: Evidence from South Africa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(5), pages 1391-1405.
    5. Boris Bravo-Ureta & Daniel Solís & Víctor Moreira López & José Maripani & Abdourahmane Thiam & Teodoro Rivas, 2007. "Technical efficiency in farming: a meta-regression analysis," Journal of Productivity Analysis, Springer, vol. 27(1), pages 57-72, February.
    6. Hanan G. Jacoby, 1993. "Shadow Wages and Peasant Family Labour Supply: An Econometric Application to the Peruvian Sierra," Review of Economic Studies, Oxford University Press, vol. 60(4), pages 903-921.
    7. E. Phimister & D. Roberts, 2006. "The Effect of Off-farm Work on the Intensity of Agricultural Production," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(4), pages 493-515, August.
    8. Gudbrand Lien & Subal C. Kumbhakar & J. Brian Hardaker, 2010. "Determinants of off‐farm work and its effects on farm performance: the case of Norwegian grain farmers," Agricultural Economics, International Association of Agricultural Economists, vol. 41(6), pages 577-586, November.
    9. Robert G. Chambers & Giannis Karagiannis & Vangelis Tzouvelekas, 2010. "Another Look at Pesticide Productivity and Pest Damage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1401-1419.
    10. Kien T. Le, 2010. "Separation Hypothesis Tests in the Agricultural Household Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1420-1431.
    11. E.T. Seyoum & G.E. Battese & E.M. Fleming, 1998. "Technical efficiency and productivity of maize producers in eastern Ethiopia: a study of farmers within and outside the Sasakawa‐Global 2000 project," Agricultural Economics, International Association of Agricultural Economists, vol. 19(3), pages 341-348, December.
    12. Sonoda, Tadashi, 2008. "AJAE Appendix: A System Comparison Approach to Distinguish Two Non-Separable and Non-Nested Agricultural Household Models," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 90(2), pages 1-4.
    13. Kumbhakar, Subal C & Ghosh, Soumendra & McGuckin, J Thomas, 1991. "A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(3), pages 279-286, July.
    14. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    15. Seyoum, E. T. & Battese, G. E. & Fleming, E. M., 1998. "Technical efficiency and productivity of maize producers in eastern Ethiopia: a study of farmers within and outside the Sasakawa-Global 2000 project," Agricultural Economics, Blackwell, vol. 19(3), pages 341-348, December.
    16. Hung-Jen Wang, 2002. "Heteroscedasticity and Non-Monotonic Efficiency Effects of a Stochastic Frontier Model," Journal of Productivity Analysis, Springer, vol. 18(3), pages 241-253, November.
    17. Dale W. Jorgenson & Lawrence J. Lau, 1975. "The Structure of Consumer Preferences," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 4, number 1, pages 49-101, National Bureau of Economic Research, Inc.
    18. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
    19. Tadashi Sonoda, 2008. "A System Comparison Approach to Distinguish Two Nonseparable and Nonnested Agricultural Household Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 509-523.
    20. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
    21. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-1417, November.
    22. de Janvry, Alain & Fafchamps, M. & Sadoulet, Elisabeth, 1991. "Peasant Household Behavior with Missing Markets: Some Paradoxes Explain," CUDARE Working Papers 198579, University of California, Berkeley, Department of Agricultural and Resource Economics.
    23. J. Taylor & Irma Adelman, 2003. "Agricultural Household Models: Genesis, Evolution, and Extensions," Review of Economics of the Household, Springer, vol. 1(1), pages 33-58, January.
    24. 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.
    25. Subal C. Kumbhakar, 2001. "Estimation of Profit Functions When Profit Is Not Maximum," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 1-19.
    26. Lopez, Ramon E., 1984. "Estimating labor supply and production decisions of self-employed farm producers," European Economic Review, Elsevier, vol. 24(1), pages 61-82.
    27. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eleonora Matteazzi & Martina Menon & Federico Perali, 2017. "The Collective Farm-household Model: Policy and Welfare Simulations," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(1), pages 111-153.
    2. Wang, Xiaobing, 2007. "Labor market behavior of Chinese rural households during transition," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 42, number 92321.
    3. Bojnec, Stefan & Ferto, Imre, 2011. "Impact of Off-farm Income on Farm Efficiency in Slovenia," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114258, European Association of Agricultural Economists.
    4. Antti Saastamoinen, 2015. "Heteroscedasticity Or Production Risk? A Synthetic View," Journal of Economic Surveys, Wiley Blackwell, vol. 29(3), pages 459-478, July.
    5. Henning, Christian H.C.A. & Henningsen, Arne, 2005. "Modeling Price Response of Farm Households Under Imperfect Labor Markets: A Farm Household Approach to Family Farms in Poland," 94th Seminar, April 9-10, 2005, Ashford, UK 24431, European Association of Agricultural Economists.
    6. Hayatullah Ahmadzai, 2018. "Factor market participation and tests for separability in Afghanistan," Discussion Papers 2018-10, University of Nottingham, CREDIT.
    7. Merfeld, Joshua D., 2020. "Smallholders, Market Failures, and Agricultural Production: Evidence from India," IZA Discussion Papers 13682, Institute of Labor Economics (IZA).
    8. Adebayo Shittu, 2014. "Off-farm labour supply and production efficiency of farm household in rural Southwest Nigeria," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 2(1), pages 1-21, December.
    9. Hasan Tekgüç, 2012. "Separability between own food production and consumption in Turkey," Review of Economics of the Household, Springer, vol. 10(3), pages 423-439, September.
    10. Nguyen To-The & Tuan Nguyen-Anh, 2021. "Market-oriented extension and farming efficiency in small-scale maize farmers: evidence from Northern Vietnam," Journal of Agribusiness in Developing and Emerging Economies, Emerald Group Publishing, vol. 11(2), pages 194-218, March.
    11. Dillon, Brian & Barrett, Christopher B., 2017. "Agricultural factor markets in Sub-Saharan Africa: An updated view with formal tests for market failure," Food Policy, Elsevier, vol. 67(C), pages 64-77.
    12. Daniel Solís & Boris E. Bravo‐Ureta & Ricardo E. Quiroga, 2009. "Technical Efficiency among Peasant Farmers Participating in Natural Resource Management Programmes in Central America," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 202-219, February.
    13. Glauben, Thomas & Herzfeld, Thomas & Loy, Jens-Peter & Renner, Swetlana & Hockmann, Heinrich, 2012. "The impact of fiscal policies on agricultural household decisions," Economic Modelling, Elsevier, vol. 29(2), pages 166-177.
    14. Solis, Daniel & Bravo-Ureta, Boris E. & Quiroga, Ricardo E., 2006. "The Effect Of Soil Conservation On Technical Efficiency: Evidence From Central America," 2006 Annual meeting, July 23-26, Long Beach, CA 21345, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Kopper, Sarah A., 2018. "Agricultural labor markets and fertilizer demand: Intensification is not a single factor problem for non-separable households," 2018 Annual Meeting, August 5-7, Washington, D.C. 274184, Agricultural and Applied Economics Association.
    16. Md Abdur Rouf, 2020. "Evaluation of Agricultural Projects by Parametric Cost Efficiency and Productivity-gap Approaches: An Empirical Study of Flood Control and Drainage Systems in the Southwest Coastal Area of Bangladesh," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 22.
    17. Mardochée Ngandu Mulotwa & Christian Mabi & Isaac Kalonda & Séraphin Mvudi, 2018. "Labor Demand and Farm Household Welfare Under Non-separability in South Kivu (DRC) [Demande du travail agricole et bien-être des ménages agricoles sous non-séparabilité au Sud-Kivu (RD Congo)]," Working Papers hal-01845493, HAL.
    18. Christopher F. Parmeter & Hung-Jen Wang & Subal C. Kumbhakar, 2017. "Nonparametric estimation of the determinants of inefficiency," Journal of Productivity Analysis, Springer, vol. 47(3), pages 205-221, June.
    19. Chen, Jing & Rozelle, Scott, 2003. "Market Emergence And The Rise And Fall Of Backyard Hog Production In China," 2003 Annual meeting, July 27-30, Montreal, Canada 21969, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Bagamba, Fredrick & Burger, Kees & Kuyvenhoven, Arie, 2007. "Determinants of smallholder farmer labour allocation decisions in Uganda," 106th Seminar, October 25-27, 2007, Montpellier, France 7920, European Association of Agricultural Economists.

    More about this item

    Keywords

    non-separable agricultural household model; household and farm efficiency; cereal farms; UK;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crt:wpaper:2001. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/deuchgr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kostis Pigounakis (email available below). General contact details of provider: https://edirc.repec.org/data/deuchgr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.