Off-Farm Labor Supply Responses to Permanent and Transitory Farm Income

Chul-Woo Kwon, Peter Orazem and Daniel Otto

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: A sample of Iowa farm couples is used to evaluate whether off-farm labor supply decisions respond to permanent and transitory components of farm income. Off-farm labor supply of both spouses declines in response to increases in permanent farm income. Farm wives also reduce off-farm labor supply in response to positive transitory farm income shocks. Consequently, one mechanism farm households use to smooth their goods consumption when facing fluctuating farm income is to modify their consumption of leisure. Ability to smooth goods consumption does not imply the absence of liquidity constraints among farm households unless leisure consumption is also smoothed. Key Words: Frisch equations, off-farm labor, farm income, transitory shocks, permanent shocks

Date: 2003-07-18
New Economics Papers: this item is included in nep-agr
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Published in Agricultural Economics, January 2006, vol. 34 no. 1, pp. 59-68

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Related works:
Journal Article: Off‐farm labor supply responses to permanent and transitory farm income (2006)
Working Paper: Off-farm labor supply responses to permanent and transitory farm income (2006)
Working Paper: OFF-FARM LABOR SUPPLY RESPONSES TO PERMANENT AND TRANSITORY FARM INCOME (2003)
Working Paper: Off-farm labor supply responses to permanent and transitory farm income (2003)
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