Ayal Kimhi

Is Part-Time Farming Really a Step in the Way Out of Agricultural?

One of the most important questions regarding the phenomenon of part-time farming is whether it is a stable situation or just a step in the way out of agriculture. This article provides support for the first possibility in the context of Israeli family farms in the 1970s. A multinomial logit model of work choices is estimated, including estimated transition probabilities among the explanatory variables. The results indicate that a high objective probability of exit from farming within the next decade decreased the tendency to engage in off-farm work, especially in a full-time job, in 1971. Copyright 2000, Oxford University Press.

Optimal Timing of Farm Transferal From Parent to Child

When farm income is first increasing and then decreasing in the operators age, the timing of farm transferal from parent to child is optimally determined by families who seek to maximize joint income or utility. Using a sample of Israeli farms in which the operation of the farm changed from parent to child between 1971 and 1981, equations of transfer time and childs education are derived. A simultaneous equation, censored regression model is estimated using a two-stage method. Results support the theoretical predictions that transfer time is decreasing with parents age and with childs schooling, and increasing with parents experience.

Intergenerational Succession in Small Family Businesses: Borrowing Constraints and Optimal Timing of Succession

Small family businesses differ from non-family businesses in that their functioning is not independent of the life cycle of the owner-operator, and in that other family considerations sometimes lead to sub-optimal managerial decisions from the point of view of the business. This is why a smooth intergenerational succession is essential to the profitability of the business, and to the welfare of the family as a whole. Succession within the family involves first of all the choice of a successor. The choice is affected by birth order, age differentials, and qualifications of potential successors. Choosing a successor means reaching an agreement about the timing of succession and income distribution before and after succession. This paper focuses on the decision of the business-operating family when to bring in the designated successor. A utility-maximizing time is shown to differ from the income-maximizing time only in the presence of binding borrowing constraints. Such constraints are likely to enhance an earlier succession in order to use the successors accumulated off-business assets to ease the constraints and to increase future business income due to earlier accumulation of business-specific human capital by the successor. An additional model shows that the successor will not be willing to wait indefinitely for the formal ownership transfer of the business, because of the risk of being disinherited in some future period. The consequences of possible strategic behaviors of both the owner and potential successors on the results of these models is discussed informally.

Trade and the rate of income convergence

To the extent that trade policy affects trade flows between countries, the ramifications can be far-reaching from an economic growth perspective. This paper examines one aspect of these ramifications, namely the impact of changes in the extent of trade between countries on changes in the rate of reduction in the size of the income gap that exists between them. Export and import data are used as the criteria for determining bilateral trade between major trade partners, resulting in the creation of 127 pairs of countries on the basis of export data and 134 pairs on the basis of import data. An increase in trade between major trade partners - and, in particular, increased exports by poorer countries to their wealthier partners - is shown to be related to an increase in the rate of convergence between the countries.

Off-Farm Work Decisions of Farm Couples: Estimating Structural Simultaneous Equations with Ordered Categorical Dependent Variables

We estimate a full system of structural farm and off-farm labor supply equations of farm couples as a set of simultaneous equations with categorical dependent variables. In a first step, the reduced form is estimated by ordered probit with unknown thresholds. Then, the identified structural coefficients are recovered from the reduced-form coefficients through minimum distance estimation. Using census data from Israel, we find that for men, a one-hour increase in farm labor supply causes a one-hour decrease in off-farm labor supply, but not for women. This could not have been found without estimating structural coefficients. Copyright 1996, Oxford University Press.

Family Composition and Off-Farm Participation Decisions in Israeli Farm Households

This article studies the relationship between the off-farm participation behavior of farm operators and their spouses and the demographic composition of the household. We focus on farm families without parents, siblings or partners, and examine the effects of the existence of elderly children of the farm couple. We find that both the father and the mother tend to reduce their participation in off-farm work as the number of elderly children rises. This result holds even after controlling for observed characteristics. We also find that the effect of elderly children stems from considerations related to both farm production and household production. Copyright 2004, Oxford University Press.

Differential Human Capital Investments and the Choice of Successor in Family Farms

Economic development typically is characterized by occupational migration away from agriculture. Migrants commonly are more educated than average. On the other hand, the remaining farmers are expected to master more sophisticated production techniques. Hence, the pace of development depends on human capital accumulation of the population as a whole and of farmers in particular. For this reason, it is important to understand the way human capital investment decisions are made in the rural sector. Human capital levels are determined to a large extent within the family, i.e., through investments of parents in their children (Becker, chap. 6). Investments in children are motivated by altruism (Becker, pp. 362-79), by concern about family succession (Chu), and by expectations of receiving benefits from descendants in the future (Bernheim, Schleifer, and Summers). Parents care for migrating children as well as for succeeding children. They can also influence the decisions of succession versus migration, both directly through their authority and indirectly through differential investments in sector-specific human capital. Intergenerational succession is common in the farm sector, as the value of the farm within the family is higher than its market value (Kimhi 1994b). Farms in developed economies generally are not large enough to permit division among several successors. Hence, this discussion will focus on the case of a single successor. One of the difficult decisions facing the farm family is the choice of a suitable successor. Birth order and age differentials of children affect this decision, since the choice is not independent of the timing of farm transfer (Kimhi 1994a). The emphasis in this paper is on differential ability. If one child has an absolute advantage in farming and the other in off-farm jobs, the choice is easy. It is more difficult when one child is more able to run the farm and can also do better off the farm. On the one

Socio-Economic Determinants of Health and Physical Fitness in Southern Ethiopia

The dependence of health and physical fitness on the socio-economic factors of rural families in southern Ethiopia is investigated, with particular emphasis on the role of inequality. This paper contributes to our knowledge of the effect of inequality on health in several ways: it compares the results of objective and subjective health measures, it distinguishes between wealth inequality and nutrition inequality, and it evaluates the impact of nutrition inequality both at the village level and at the household level. The subjective health measures are the number of days respondents were ill during the last month, their ability to walk distances, their ability to carry heavy loads, and their ability to work in the field. The objective health measure is having Body Mass Index (BMI) lower than 18.5. Males are healthier than females. Height has a positive and significant effect on health and fitness and the same is true for per-capita wealth measured at the village level. Availability of satisfactory health facilities has a negative effect on morbidity. Per-capita wealth inequality is positively associated with morbidity and with a low BMI. Within-household nutrition inequality has a complex effect on health and physical fitness: the effect is negative, but only for household members whose nutritional status is above the household mean. The results indicate a clear positive effect of economic well-being on health and physical fitness. The role of inequality is less clear, and certainly deserves further analyses at both the theoretical and empirical levels.

Demographic composition of farm households and its effect on time allocation.

The decisions of farmers to work on or off the farm depend in part on household composition and the participation patterns of other family members. This is because of the differential income effects resulting from the households joint budget constraint and the time and money costs imposed by different household members, and because of the substitutability or complementarity between the farm labor inputs of different household members. This paper demonstrates this point by estimating a joint labor participation model of farm operators and their spouses, in which participation decisions are conditioned on household composition. The model is estimated as a multivariate probit model with fixed effects, by quasi maximum likelihood methods. The results are consistent with the hypotheses that the time costs imposed on the household by small children are larger than the money costs; that the relative importance of time costs is decreasing as children grow up; and that the farm labor inputs of older children are complements to the couples farm labor inputs but those of prime-age adults are substitutes. JEL classification: J22, J43

Do family farms really converge to a uniform size? The role of unobserved farm efficiency

We analyse the growth of family farms in Israeli cooperative villages during a period of economic turmoil. We use instrumental variables to account for the endogeneity of initial farm size, and correct for selectivity as a result of farm survival. We also include a technical efficiency index, derived from the estimation of a stochastic frontier production model, as an explanatory variable. Our aim is to check whether ignoring efficiency could have been the reason for convergence results obtained elsewhere in the literature. We found that technical efficiency is an important determinant of farm growth, and that not controlling for technical efficiency could seriously bias the results. In particular, larger farms are found to grow faster over time, while without controlling for technical efficiency the farm growth process seemed to be independent of initial farm size. The increasing polarisation of farm sizes in Israel has ramifications for the inefficiencies induced by the historical quota system, for the political power of the farm sector and for the social stability of farm communities.