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Heterogeneity in the agricultural sector and its implications for modeling viability

Author

Listed:
  • Cecilia ALEXANDRI

    (Institute of Agricultural Economics, Romanian Academy.)

  • Corina SAMAN

    (Institute for Economic Forecasting, Romanian Academy. Institute of Agricultural Economics, Romanian Academy.)

  • Bianca PAUNA

    (Centre for Macroeconomic Modelling, National Institute of Economic Research, Romanian Academy.)

Abstract

The paper investigates the viability of crop farms in Romania, an important topic because in rural regions agriculture is the main activity of a large part of the labour force and plays an important role in food security. In the literature, only trends and changes in viability as a result of policy at the European level are analysed. This study advances the literature by identifying the determinants of viability with a new model (correlated random effects ordered probit model) that intrinsically captures unobserved heterogeneity of farms. The results show that the viability of crop farms dependents incrementally on the volume of resources (scale). The paper shows that there is scope to increase farms’ income if some changes are made in the structure of production factors (land, labor).

Suggested Citation

  • Cecilia ALEXANDRI & Corina SAMAN & Bianca PAUNA, 2024. "Heterogeneity in the agricultural sector and its implications for modeling viability," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 144-157, December.
    • Handle: RePEc:rjr:romjef:v::y:2024:i:4:p:144-157
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    More about this item

    Keywords

    Viability; Crop Farms; Correlated Random Effects Ordered Probit Model;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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