Off-farm work participation of Israeli farm couples: The importance of farm work participation status

This article claims that coefficients of off-farm work participation equations for farm residents might be estimated inconsistently if selectivity based on farm participation is ignored. Participation equations will be different for farm residents who do not work on farm, especially with respect to the dependence of reservation wages on farm attributes. I estimate an endogenous switching regression model in which farm and off-farm participation equations are estimated jointly while the off-farm participation coefficients are different for those who work on farm and those who don't. Using the 1981 Israeli Census of Agriculture data, I reject the hypothesis of insignificant selection bias and the hypothesis of equal coefficients in the two subsamples.