Demographic composition of farm households and its effect on time allocation

The decisions of farmers to work on or off the farm depend in part on household composition and the participation patterns of other family members. This is because of the differential income effects resulting from the household's joint budget constraint and the time and money costs imposed by different household members, and because of the substitutability or complementarity between the farm labor inputs of different household members. This paper demonstrates this point by estimating a joint labor participation model of farm operators and their spouses, in which participation decisions are conditioned on household composition. The model is estimated as a multivariate probit model with fixed effects, by quasi maximum likelihood methods. The results are consistent with the hypotheses that the time costs imposed on the household by small children are larger than the money costs; that the relative importance of time costs is decreasing as children grow up; and that the farm labor inputs of older children are complements to the couple's farm labor inputs but those of prime-age adults are substitutes.