"Small" or "Large" Farm: Some Methodological Considerations

Howard E. Doran

American Journal of Agricultural Economics, 1985, vol. 67, issue 1, 130-132

Abstract: Often the estimation of agricultural production technologies in less developed countries is achieved by dividing the sample arbitrarily into "small" and "large" farms and estimating a separate production function for each group. This is equivalent to including an appropriate dummy variable in a single regression on the whole sample. A modification of this approach is to replace the dummy variable (a step-function) by either a cumulative normal or logistic function. The parameters of such a "generalized dummy variable" convey valuable information on whether a small-large categorization is appropriate and, if so, where the division should be made.

Date: 1985
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