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Importance of the Farm Sector to the Economy: A Multiplier Approach
Author(s) -
Mirakhor Abbas,
Orazem Frank
Publication year - 1968
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1237628
Subject(s) - nonfarm payrolls , multiplier (economics) , economics , farm income , labour economics , agricultural economics , agriculture , geography , macroeconomics , production (economics) , archaeology
A mathematical model is presented, which uses a multiplier approach to determine the relation of farm income to total income in a community, state, or region. Application of the model to Kansas data for the years 1950 to 1966 showed ( a ) that, on the average, $1.00 of farm income generated $3.33 of total income, whereas $1.00 of nonfarm income generated only $1.46 of total income, ( b ) that the farm sector expended 88.4 percent of its income in the nonfarm sector, whereas the nonfarm sector expended only 10 percent of its income in the farm sector, and ( c ) that there was an increasing interdependence between the farm and nonfarm sectors from 1950 to 1966