Intergenerational Succession on Israeli Family Farms

Using a binary-choice analysis, we study the likelihood of intra family intergenerational succession on Israeli family farms. This provides policy-relevant information on the long-run survival probabilities of these farms in a period of increased vulnerability of family farms. We compare two definitions of succession, one based on an official declaration of a succeeding child, and another which is more operational, based on the existence of an adult child who works on the farm alongside the parents. We also validate the probit results by comparing them to those of a more robust semi-nonparametric method. We identify a number of family and farm attributes whose effects are statistically significant and consistent with economic theory based on the notion of an economic surplus resulting from intra-family succession and on the notion of bargaining between the generations.