Title

Off-farm labor supply responses to permanent and transitory farm income

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

1-2006

Journal or Book Title

Agricultural Economics

Volume

34

Issue

1

First Page or Article ID Number

59

Last Page

67

DOI

10.1111/j.1574-0862.2006.00103.x

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.

JEL Classification

J22, R11, R23

Comments

This is a working paper of an article from Agricultural Economics 34 (2006): 59, doi: 10.1111/j.1574-0862.2006.00103.x.