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Agricultural productivity, shadow wages and off-farm labor decisions in Nicaragua

Alexandre N. Almeida and Boris E. Bravo-Ureta

Economic Systems, 2019, vol. 43, issue 1, 99-110

Abstract: The objective of this study is to analyze the decision to work off-farm by male and female farmers in Nicaragua using a three-year unbalanced panel dataset. Shadow income and shadow wages are also estimated. Moreover, to mitigate biases from unobserved individual and farm time-invariant characteristics as well as from sample selection, we apply a semiparametric approach for panel data. Our main findings suggest that shadow wages play a major role in off-farm labor decisions for both males and females. This implies that less labor is allocated to off-farm activities as the opportunity cost for agricultural work goes up. In addition, as the on-farm marginal productivity of households (i.e., shadow income) rises, both males and females reduce the hours they allocate to off-farm activities.

Keywords: Shadow wages; Farm productivity; Semiparametric models; Labor supply; Nicaragua (search for similar items in EconPapers)
JEL-codes: Q12 D13 J16 J22 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.ecosys.2018.09.002

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Handle: RePEc:eee:ecosys:v:43:y:2019:i:1:p:99-110