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Using Shadow Wages to Estimate Labor Supply of Agricultural Households
Author(s) -
Skoufias Emmanuel
Publication year - 1994
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 - 10.2307/1243623
Subject(s) - economics , shadow (psychology) , simultaneity , agriculture , consumption (sociology) , shadow price , labour economics , marginal product of labor , production (economics) , marginal product , labor demand , wage , microeconomics , geography , psychology , mathematical optimization , mathematics , archaeology , psychotherapist , social science , physics , classical mechanics , sociology
With few exceptions, most studies of the labor demand and supply decisions of agricultural households in developing countries have relied on the empirical advantages of separability. Given the questionable nature of some of the assumptions sufficient for separability, I apply a recent methodology that accounts for the simultaneity between the production and consumption decisions of a farm household. Using data from rural India, direct estimates of the marginal productivities (shadow wages) of family male and female labor are derived from a Cobb‐Douglas agricultural production function. The estimated shadow wages and income are then used as regressors in a structural model of labor supply.