Labor allocation decisions of Virginia's farm families

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Virginia Tech


Using data collected by the Virginia Agricultural Statistical Service in 1989, off-farm labor participation models were developed to identify factors that influence the probability that a farm operator or spouse in Virginia would choose to work off the farm. The sample indicated that a substantial proportion of Virginia farms had at least one member working off the farm. Higher total incomes were also earned by families with an operator and/or spouse working off the farm. In addition, the proportion of total income originating from off-farm sources was large regardless of whether the operator or spouse worked off the farm or not. As a result of this survey, the picture developed of farm operators and spouses in Virginia is different than a traditional view of farming would support.

Because of the dichotomous dependent variable and the different responses expected from the operator and spouse, probit analysis was selected to estimate separate participation models for the farm operator and spouse. The empirical results reveal that human capital, labor supply and labor demand characteristics influence the off-farm employment decisions of both the operator and spouse, though not in a uniform manner. Additionally, variables found to be important to off-farm labor force participation were primarily not farm specific. Changes in the non-farm economy are expected to affect the majority of Virginia farms more than changes in the farm economy. It is also clear that the majority of farm families in Virginia have a vested interest in efforts made to develop and strengthen the local economy.