Simultaneous estimation of work choices and the level of farm activity using panel data

Avner Ahituv, Ayal Kimhi*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

30 Scopus citations

Abstract

We analyse the simultaneous determination and evolution over time of work choices and the level of farm activity, using a panel of Israeli farm households. We estimate jointly a multinomial choice model of work activity and an endogenous switching regression of farm size, accounting for unobserved heterogeneity and correcting for simultaneity bias. Our results imply that some family farms tend to expand over time and specialise in farming, whereas other farm households downsize their farming operation and increase their engagement in the off-farm labour market. Therefore, the size distribution of farms is converging towards a bimodal distribution.

Original languageAmerican English
Pages (from-to)49-71
Number of pages23
JournalEuropean Review of Agricultural Economics
Volume33
Issue number1
DOIs
StatePublished - Mar 2006

Bibliographical note

Funding Information:
This research was supported in part by Research Grant Award IS-3291-02 from BARD, the United States–Israel Binational Agricultural Research and Development Fund. We thank Elana Dror from the Central Bureau of Statistics in Israel for providing the data. The research was completed when the second author served as the Bogen Visiting Associate Professor of Economics at the University of Pennsylvania.

Keywords

  • Endogeneity
  • Farm size
  • Off-farm work
  • Panel
  • Unobserved heterogeneity

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