LABOUR SUPPLY AND OFF‐FARM WORK BY FARMERS: THEORY AND ESTIMATION

Abstract

Off‐farm employment has become increasingly important as an aspect of resource adjustment and a source of income in Australian agriculture. However, it is surprising that there is a paucity of work on this topic reported in the agricultural economics literature. Therefore, we have drawn upon recent developments in labour economics in order to investigate off‐farm employment in Australia. A conceptual model of the allocation of a farmer's labour between farm and off‐farm work is developed and applied to cross‐sectional data from the Australian Agricultural and Grazing Industries Survey. A Tobit maximum likelihood procedure is utilised to test the influences of the life cycle, level of human capital, wealth, non‐wage income and farm income on the off‐farm labour supply of farmers. 1982 The Australian Agricultural Economics Society