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Supervision and Transaction Costs: Evidence from Rice Farms in Bicol, the Philippines


  • Evenson, R.E.
  • Kimhi, A.
  • DeSilva, S.


In this paper, we analyze supervision activities reported in a cross-section survey of rice farmers in the Bicol region of the Philippines. This survey is unique because it provides supervision data at the farm task level. We present a simple optimization model in which supervision intensity increases the productivity of hired workers, which is assumed to be lower than that of family members due to the transaction costs. The model predicts that supervision intensity will increase with transaction costs. We use different institutional conditions to proxy for transaction costs, and estimate the demand for supervision time for four different classes of rice production tasks. The estimation strategy controls for selectivity in both hiring and supervising. The results show a positive effect of transaction costs on supervision intensity.

Suggested Citation

  • Evenson, R.E. & Kimhi, A. & DeSilva, S., 2000. "Supervision and Transaction Costs: Evidence from Rice Farms in Bicol, the Philippines," Papers 814, Yale - Economic Growth Center.
  • Handle: RePEc:fth:yalegr:814

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    References listed on IDEAS

    1. Fare,Rolf & Grosskopf,Shawna & Lovell,C. A. Knox, 2008. "Production Frontiers," Cambridge Books, Cambridge University Press, number 9780521072069, March.
    2. Lanzona, L.A. & Evenson, R.E., 1997. "The Effects of Transaction Costs on Labor Market Participation and Earnings: Evidence from Rural Philippine Markets," Papers 790, Yale - Economic Growth Center.
    3. Kimhi, Ayal, 1999. "Double-Hurdle and Purchase-Infrequency Demand Analysis: A Feasible Integrated Approach," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(4), pages 425-442, December.
    4. Reifschneider, David & Stevenson, Rodney, 1991. "Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 715-723, August.
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    6. Garcia, Jaume & Labeaga, Jose M, 1996. "Alternative Approaches to Modelling Zero Expenditure: An Application to Spanish Demand for Tobacco," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 489-506, August.
    7. Michael Kevane, 1996. "Agrarian Structure and Agricultural Practice: Typology and Application to Western Sudan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 236-245.
    8. Erica L. Groshen & Alan B. Krueger, 1990. "The Structure of Supervision and Pay in Hospitals," ILR Review, Cornell University, ILR School, vol. 43(3), pages 134-1-146-, April.
    9. Neal, Derek, 1993. "Supervision and Wages across Industries," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 409-417, August.
    10. Leonardo A. Lanzona & Robert E. Evenson, 1997. "The Effects of Transactions Costs on Labor Market Participation and Earnings: Evidence from Rural Philippine Markets," Working Papers 790, Economic Growth Center, Yale University.
    11. Jones, Andrew M, 1992. "A Note on Computation of the Double-Hurdle Model with Dependence with an Application to Tobacco Expenditure," Bulletin of Economic Research, Wiley Blackwell, vol. 44(1), pages 67-74, January.
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    14. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-512, March.
    15. 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.
    16. Bradley T. Ewing & James E. Payne, 1999. "The Trade-Off Between Supervision and Wages: Evidence of Efficiency Wages from the NLSY," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 424-432, October.
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    Cited by:

    1. Jamal, Erizal & Dewi, Yovita Anggita, 2. "Technical Efficiency of Land Tenure Contracts in West Java Province, Indonesia," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 6(2).
    2. repec:sag:seajad:v:6:y:2009:i:2:p:21-34 is not listed on IDEAS
    3. Sanjaya DeSilva, 2011. "Access to Markets and Farm Efficiency: A Study of Rice Farms in the Bicol Region, Philippines," Economics Working Paper Archive wp_687, Levy Economics Institute.
    4. Fertő, Imre, 2002. "A mezőgazdasági termelés szerkezetének változásai a fejlett országokban, I. Miért a családi gazdaság a meghatározó üzemforma a fejlett országok mezőgazdaságában?
      [Changes in the structure of agricu
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 574-596.
    5. James Roumasset, 2006. "The Economics of Agricultural Development: What Have We Learned? Processes," Working Papers 200604, University of Hawaii at Manoa, Department of Economics.
    6. Ibrahim Demir, 2016. "The firm size, farm size, and transaction costs: the case of hazelnut farms in Turkey," Agricultural Economics, International Association of Agricultural Economists, vol. 47(1), pages 81-90, January.

    More about this item



    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets


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