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

Avner Ahituv and Ayal Kimhi

European Review of Agricultural Economics, 2006, vol. 33, issue 1, 49-71

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. Copyright 2006, Oxford University Press.

Date: 2006
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European Review of Agricultural Economics is currently edited by Timothy Richards, Salvatore Di Falco, Céline Nauges and Vincenzina Caputo

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