Essays on Econometrics of the Agricultural Household Model

Le, Kien Trung, Department of Economics, University of Virginia
McLaren, John, Department of Economics, University of Virginia

This dissertation includes three essays on econometrics of the agricultural household model. The first essay provides a new method to derive the shadow wage and shadow income, which are the key determinants of the farmer's labor supply. The method is based on the observation that the shadow wage is the marginal product of labor at the optimal point of both farm and household production functions. Thus, under certain assumptions on the functional form of the production functions, both the shadow wage and shadow income can be derived without estimating the farm production function. Using a sample of Vietnamese farmers, I estimate the labor supply function and show that the results from the new method are more consistent with the theory than the results from the method prescribed in the literature. The second essay proposes an empirical agricultural household model which is robust to market imperfections and tractable enough for simulation and parameter estimation. The model is used to study the effects of trade liberalization in Vietnam from 1993 to 1998. Although Vietnamese households are found to have enjoyed increases in consumption, agricultural output, shadow income, and welfare on average, the effects varied significantly: 680f the households benefited while 32% were made worse off. However, liberalization did not increase inequality: the Gini index remained at 0.33 and the poverty rate fell from 66.4% to 53.9%. iii The third essay offers a new separation hypothesis test which allows the researcher to assign each individual farmer to the appropriate model rather than just assigning a model to all farmers in a given sample. The method comes from the structural break literature in time-series econometrics. Based on the standard agricultural household model, I develop a search dimension in cross-section data, which acts like a time dimension in time-series data, so that the method can be applied to a test with crosssection data. Given a sample of Indian farmers, the new test assigns 230f the farmers in the sample to the model with separation and 77% to the model with non-separation. iv Contents Essay 1: Shadow Wages and Shadow Income in Farmers' Labor Supply Functions....

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PHD (Doctor of Philosophy)
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