Agricultural Production Organization in Transition Economies and the Role of Human Capital: Evidence from Romania

This paper examines the production mode choices of rural households with an emphasis on the role of human capital in the agricultural transformation process. Farm restructuring in Central and Eastern Europe has resulted in a broad range of farm types, such as co-operatives, partnerships, individual farms and combinations of those. The fact that resources are allocated into different production organization modes is attributed to the utility maximization strategy of heterogeneous agents deriving income from uncertain sources in the face of absent or imperfect factor markets. Empirical results from a multinomial logit model estimated with data from two-year nation-wide survey of Romanian farm households support the hypothesis that the outcome of the transformation process depends primarily on both the human capital characteristics of and economic risks faced by the households