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A System Comparison Approach to Distinguish Two Nonseparable and Nonnested Agricultural Household Models

Tadashi Sonoda

American Journal of Agricultural Economics, 2008, vol. 90, issue 2, 509-523

Abstract: This study distinguishes two nonseparable agricultural household models for a self-employed farm household. One assumes heterogeneity of farm and nonfarm labor and a competitive market for nonfarm labor. The other assumes homogeneity of the two types of labor and a restricted market for nonfarm labor. We compare demand systems that are derived from them, which have different dependent variables and different numbers of equations. We apply a Cox-type test to compare these complicated nonnested systems. Results show clearly that the former is better for Japanese rice-farming households. Comparison of price elasticities for those models verifies the importance of that test. Copyright 2008, Oxford University Press.

Date: 2008
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American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

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