Off-farm work decisions of farm couples: Estimating structural simultaneous equations with ordered categorical dependent variables

Ayal Kimhi, Myoung-jae Lee

Research output: Contribution to journalArticle

24 Citations (Scopus)

Abstract

We estimate a full system of structural farm and off-farm labor supply equations of farm couples as a set of simultaneous equations with categorical dependent variables. In a first step, the reduced form is estimated by ordered probit with unknown thresholds. Then, the identified structural coefficients are recovered from the reduced-form coefficients through minimum distance estimation. Using census data from Israel, we find that for men, a one-hour increase in farm labor supply causes a one-hour decrease in off-farm labor supply, but not for women. This could not have been found without estimating structural coefficients.

Original languageEnglish
Pages (from-to)687-698
Number of pages12
JournalAmerican Journal of Agricultural Economics
Volume78
Issue number3
Publication statusPublished - 1996 Aug 1
Externally publishedYes

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Keywords

  • Categorical dependent variables
  • Farm labor supply
  • Minimum distance estimation
  • Off-farm labor supply
  • Structural simultaneous equations

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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