IDEAS home Printed from https://ideas.repec.org/p/isu/genres/10643.html
   My bibliography  Save this paper

Off-Farm Labor Supply Responses to Permanent and Transitory Farm Income

Author

Listed:
  • Kwon, Chul-Woo
  • Orazem, Peter
  • Otto, Daniel

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. Key Words: Frisch equations, off-farm labor, farm income, transitory shocks, permanent shocks

Suggested Citation

  • Kwon, Chul-Woo & Orazem, Peter & Otto, Daniel, 2003. "Off-Farm Labor Supply Responses to Permanent and Transitory Farm Income," Staff General Research Papers Archive 10643, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:10643
    as

    Download full text from publisher

    File URL: http://www2.econ.iastate.edu/papers/paper_10643_03020.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael R. Langemeier & George F. Patrick, 1993. "Farm Consumption and Liquidity Constraints," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 479-484.
    2. Bierlen, Ralph & Ahrendsen, Bruce L. & Dixon, Bruce L., 1998. "Impacts of Financial Characteristics and the Boom-Bust Cycle on the Farm Inventory-Cash Flow Relationship," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 30(02), pages 363-377, December.
    3. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    4. Ashok K. Mishra & Barry K. Goodwin, 1997. "Farm Income Variability and the Supply of Off-Farm Labor," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 880-887.
    5. Bierlen, Ralph W. & Ahrendsen, Bruce L. & Dixon, Bruce L., 1998. "Impacts Of Financial Characteristics And The Boom-Bust Cycle On The Farm Inventory-Cash Flow Relationship," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 30(02), December.
    6. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
    7. Skoufias, Emmanual & Parker, Susan W., 2002. "Labor market shocks and their impacts on work and schooling," FCND briefs 129, International Food Policy Research Institute (IFPRI).
    8. Hanan G. Jacoby & Emmanuel Skoufias, 1998. "Testing Theories of Consumption Behavior Using Information on Aggregate Shocks: Income Seasonality and Rainfall in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 1-14.
    9. Peter J. Barry, 1998. "Credit Constraints, Farm Characteristics, and the Farm Economy: Differential Impacts on Feeder Cattle and Beef Cow Inventories," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 708-723.
    10. Huffman, Wallace E., 1991. "Agricultural Household Models: Survey and Critique," Staff General Research Papers Archive 11008, Iowa State University, Department of Economics.
    11. Lass, Daniel A. & Findeis, Jill L. & Hallberg, Milton C., 1989. "Off-Farm Employment Decisions By Massachusetts Farm Households," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 18(2), October.
    12. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
    13. Joseph G. Altonji & Aloysius Siow, 1987. "Testing the Response of Consumption to Income Changes with (Noisy) Panel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 293-328.
    14. Gordon L. Carriker & Michael R. Langemeier & Ted C. Schroeder & Allen M. Featherstone, 1993. "Propensity to Consume Farm Family Disposable Income from Separate Sources," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 739-744.
    15. Ralph Bierlen & Allen M. Featherstone, 1998. "Fundamental q, Cash Flow, and Investment: Evidence from Farm Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 427-435, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chang, Hung-Hao & Yen, Steven T., 2009. "Off-farm Employment and Food Consumption at Home and away from Home: Evidence from Farm Households in Taiwan," 2009 Conference, August 16-22, 2009, Beijing, China 51362, International Association of Agricultural Economists.
    2. Laure Latruffe & Stefan Mann, 2009. "Another look at the distribution of direct payments: The link with part-time farming," Working Papers SMART - LERECO 09-02, INRA UMR SMART-LERECO.
    3. 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.
    4. 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.
    5. 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).
    6. Robbins Michael W., 2014. "The Utility of Nonparametric Transformations for Imputation of Survey Data," Journal of Official Statistics, De Gruyter Open, vol. 30(4), pages 1-26, December.
    7. Laure Latruffe & Aurélia Dupuy & Yann Desjeux, 2012. "What would farmers’ strategies be in a no-CAP situation? An illustration from France," Working Papers SMART - LERECO 12-02, INRA UMR SMART-LERECO.
    8. 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).
    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. 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.

    More about this item

    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:isu:genres:10643. 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: (Curtis Balmer). General contact details of provider: http://edirc.repec.org/data/deiasus.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 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.

    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.