Off-Farm Work Participation, Off-Farm Labor Supply and On-Farm Labor Demand of U.S. Farm Operators

An agricultural household model provides the framework for modeling off-farm work participation and off-farm and on-farm work decisions of farm operators. The empirical results are obtained from fitting the econometric model to data from a large national survey. In the estimated structural off-farm work participation equation, the operator\u27s off-farm wage offer has a strong positive effect and other household income has a negative effect on the probability of off-farm work. For farm operators who participate in off-farm work, the wage elasticity of their off-farm labor supply is positive but of their on-farm labor demand is zero. The income elasticity of off-farm work for those who participate in off-farm work and of on farm work for those who specialize in farm work is negative. Implications are developed for the farm problem