Agricultural Household Models

This book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far. The model assumes that households are price-takers and is therefore recursive. The decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor. Comparative results on selected elasticities are presented for a number of economies. The empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive. The book summarizes the implications of agricultural pricing policy for the welfare of farm households, marketed surplus, the demand for nonagricultural goods and services, the rural labor market, budget revenues, and foreign exchange earnings. In addition, it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition, nutritional status, health, saving, and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings. Methodological topics, primarily the data requirements of the basic model and its extensions, along with aggregation, market interaction, uncertainty, and market imperfections are discussed. The most important methodological issues - the question of the recursive property of these models - is also discussed.

Agricultural households, both in the European Union and world-wide, have experienced important changes during the last three decades. This book covers recent advances both in family economics and in modelling the relationship between the farm-household and the farm-firm. Both theoretical and empirical aspects of Agricultural Household Modelling and Family Economics are also discussed, providing a timely contribution to research in this area.

A model addressing agricultural responses to public interventions is described. The model is confined to the short run, and it allows an assessment of the policy significance of changes in five variables that are exogenous to the household. The first variable is the price of the main agricultural output, emphasizing the elasticities of both output and market surplus; the second is the wage rate for agricultural labor, focusing on the elasticities of household labor supply and demand for hired labor; the third is the size of the family labor force, which is essential for estimating shadow wage rates; the fourth is the number of dependents, in order to permit an assessment of family planning policies; and the final variable is technology. The main features of the model are the role of the labor market, household production, household consumption, and the aggregate effect of household responses. Applicaton of the model to the Muda River Valley demonstrates that it is appropriate to a number of policy isues ranging from output price intervention to technological innovaton. Specifically, the model indicates that the economic cost of rural to urban migration is small when compared to the marginal productivity of the migrant before his departure.