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European Review of Agricultural Economics Advance Access published online on February 13, 2006
European Review of Agricultural Economics, doi:10.1093/erae/jbi035
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© Oxford University Press and Foundation for the European Review of Agricultural Economics 2006; all rights reserved

Article

Simultaneous estimation of work choices and the level of farm activity using panel data

Avner Ahituv 1 and Ayal Kimhi 2 *

1 University of Haifa, Haifa, Israel
2 The Hebrew University of Jerusalem, Agricultural Economics Department, Faculty of Agriculture, P.O. Box 12, Rehovot 76100, Israel

* To whom correspondence should be addressed.
Ayal Kimhi, E-mail: Kimhi{at}agri.huji.ac.il


  Abstract

We analyse the simultaneous determination and evolution over time of work choices and the level of farm activity, using a panel of Israeli farm households. We estimate jointly a multinomial choice model of work activity and an endogenous switching regression of farm size, accounting for unobserved heterogeneity and correcting for simultaneity bias. Our results imply that some family farms tend to expand over time and specialise in farming, whereas other farm households downsize their farming operation and increase their engagement in the off-farm labour market. Therefore, the size distribution of farms is converging towards a bimodal distribution.

Keywords: farm size; off-farm work; endogeneity; unobserved heterogeneity; panel.
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