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Labor supply, income, and welfare of the farm household

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  • Chang, Yang-Ming
  • Huang, Biing-Wen
  • Chen, Yun-Ju

Abstract

Considering family labor and hired labor as heterogeneous inputs, we present a theoretical framework in which the optimal decisions of a farm household on on-farm family and hired labor, off-farm labor supply, and leisure are determined uniquely and endogenously. Focusing on two alternative settings with and without off-farm employment constraints, we show that imperfect substitutability between family labor and hired labor is not critical to the separation of household production and consumption. The validity of the separation proposition is shown to depend crucially on whether or not the availability of off-farm job opportunities is limited. We further examine how changes in external economic conditions and government policies affect the time allocation decisions of the household, as well as the composition of household income (i.e., on-farm income and off-farm labor earnings).

Suggested Citation

  • 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.
    • Handle: RePEc:eee:labeco:v:19:y:2012:i:3:p:427-437
    DOI: 10.1016/j.labeco.2012.03.004
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    2. Tekalign Gutu Sakketa & Nicolas Gerber, 2020. "Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data," Research in Labor Economics, in: Change at Home, in the Labor Market, and On the Job, volume 48, pages 61-105, Emerald Group Publishing Limited.
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    5. Bethuel Kinuthia & Abdelkrim Araar & Laura Barasa & Stephene Maende & Faith Mariera, 2019. "Off-Farm Participation, Agricultural Production and Farmers’ Welfare in Tanzania and Uganda," Working Papers PMMA 2019-01, PEP-PMMA.
    6. Embaye, Weldensie T. & Bergtold, Jason S. & Schwab, Benjamin & Zereyesus, Yacob A., 2018. "Modeling Farm Household’s Productivity under Inseparable Production and Consumption decisions," 2018 Annual Meeting, August 5-7, Washington, D.C. 274226, Agricultural and Applied Economics Association.
    7. Nalunga, Asha & Mugisha, Johnny & Walekhwa, Peter & Smith, Jo, 2019. "The dynamics of Household labor allocation to biogas production, farm and non-farm activities in central Uganda," Renewable Energy, Elsevier, vol. 142(C), pages 461-467.
    8. Awudu Abdulai, 2018. "Simon Brand Memorial Address," Agrekon, Taylor & Francis Journals, vol. 57(1), pages 28-39, January.
    9. Laura Barasa & Bethuel K. Kinuthia & Abdelkrim Araar & Stephene Maende & Faith Mariera, 2023. "Nonfarm entrepreneurship, crop output, and household welfare in Tanzania: An exploration of transmission channels," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 762-792, July.
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    11. Na Xu & Liqin Zhang & Xiyuan Leng, 2022. "Sustainable Food Production from a Labor Supply Perspective: Policies and Implications," Sustainability, MDPI, vol. 14(23), pages 1-19, November.
    12. Min Liu & Taiyang Zhong & Xiao Lyu, 2024. "Spatial Spillover Effects of “New Farmers” on Diffusion of Sustainable Agricultural Practices: Evidence from China," Land, MDPI, vol. 13(1), pages 1-25, January.
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    More about this item

    Keywords

    Off-farm labor supply; Family and hired labor; Off-farm employment constraints;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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