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Agricultural Productivity And Off-Farm Labor Decisions By Heads And Spouses In Nicaragua: A Semiparametric Analysis Using Panel Data

  • Alex Almeida
  • Boris Bravo-Ureta

The objective of this paper is to analyze the determinants of off-farm labor supply by heads of household and their spouses in Nicaragua. Using a three-year balanced panel dataset, we refine the approach introduced by Jacoby (1993) and Skoufias (1994) to estimate shadow wages and shadow income, and we also apply the semiparametric approach developed by Kyriazidou (1997) to panel data which mitigates biases not only from some key individual and farm time-invariant characteristics but also from sample selection. The main findings suggest that the shadow wages and shadow income of household heads and their spouses play a major role in the supply of labor to off-farm activities. When the marginal productivity of agricultural households goes up, there is a reduction in hours allocated to off-farm activities. We also find that education, age, remittances, household size, and whether sons and daughters work are related to off-farm labor supply, with significant differences between their effect on heads and their spouses.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa11p508.

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Date of creation: Sep 2011
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Handle: RePEc:wiw:wiwrsa:ersa11p508
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  1. Skoufias, Emmanuel, 1993. "Labor market opportunities and intrafamily time allocation in rural households in South Asia," Journal of Development Economics, Elsevier, vol. 40(2), pages 277-310, April.
  2. Barry K. Goodwin & Matthew T. Holt, 2002. "Parametric and Semiparametric Modeling of the Off-Farm Labor Supply of Agrarian Households in Transition Bulgaria," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(1), pages 184-209.
  3. Charlier, E. & Melenberg, B. & van Soest, A.H.O., 1997. "An Analysis of Housing Expenditure Using Semiparametric Models and Panel Data," Discussion Paper 1997-14, Tilburg University, Center for Economic Research.
  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.
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  6. McCarthy, Nancy & Sun, Yan, 2009. "Participation by men and women in off-farm activities: An empirical analysis in rural northern Ghana," IFPRI discussion papers 852, International Food Policy Research Institute (IFPRI).
  7. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, 07.
  8. Horowitz, Joel L, 1992. "A Smoothed Maximum Score Estimator for the Binary Response Model," Econometrica, Econometric Society, vol. 60(3), pages 505-31, May.
  9. Huffman, Wallace & Lange, Mark D., 1989. "Off-Farm Work Decisions of Husbands and Wives: Joint Decision Making," Staff General Research Papers 10986, Iowa State University, Department of Economics.
  10. Ekaterini Kyriazidou, 1997. "Estimation of a Panel Data Sample Selection Model," Econometrica, Econometric Society, vol. 65(6), pages 1335-1364, November.
  11. Jacoby, H.G., 1990. "Shadow Wages And Peasant Family Labor Supply; An Econometric Application To The Peruvian Sierra," Papers 73, World Bank - Living Standards Measurement.
  12. Isaias Hazarmabeth Salgado-Ugarte & Makoto Shimizu & Toru Taniuchi, 1996. "Practical rules for bandwidth selection in univariate density estimation," Stata Technical Bulletin, StataCorp LP, vol. 5(27).
  13. Benjamin Davis & Paul Winters & Thomas Reardon & Kostas Stamoulis, 2009. "Rural nonfarm employment and farming: household-level linkages," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 119-123, 03.
  14. Binswanger, Hans P. & Deininger, Klaus & Feder, Gershon, 1993. "Power, distortions, revolt, and reform in agricultural land relations," Policy Research Working Paper Series 1164, The World Bank.
  15. Christopher B. Barrett & Shane M. Sherlund & Akinwumi A. Adesina, 2008. "Shadow wages, allocative inefficiency, and labor supply in smallholder agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 38(1), pages 21-34, 01.
  16. Jolliffe, Dean, 2004. "The impact of education in rural Ghana: examining household labor allocation and returns on and off the farm," Journal of Development Economics, Elsevier, vol. 73(1), pages 287-314, February.
  17. Jan Erik Askildsen & Badi H. Baltagi & Tor Helge Holmås, 2003. "Wage policy in the health care sector: a panel data analysis of nurses' labour supply," Health Economics, John Wiley & Sons, Ltd., vol. 12(9), pages 705-719.
  18. Awudu Abdulai & Christopher L. Delgado, 1999. "Determinants of Nonfarm Earnings of Farm-Based Husbands and Wives in Northern Ghana," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 117-130.
  19. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, vol. 81(1), pages 80-96, October.
  20. Matshe, Innocent & Young, Trevor, 2004. "Off-farm labour allocation decisions in small-scale rural households in Zimbabwe," Agricultural Economics, Blackwell, vol. 30(3), pages 175-186, May.
  21. Nikolaj Malchow-M�ller & Michael Svarer, 2005. "Wage - labour activities by agricultural households in Nicaragua," Journal of Development Studies, Taylor & Francis Journals, vol. 41(7), pages 1221-1246.
  22. Rosenzweig, Mark R, 1980. "Neoclassical Theory and the Optimizing Peasant: An Econometric Analysis of Market Family Labor Supply in a Developing Country," The Quarterly Journal of Economics, MIT Press, vol. 94(1), pages 31-55, February.
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