Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models

Abstract

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Labor supply, income, and welfare of the farm household

“…The separation hypothesis remains valid despite the imperfect substitutability of family and hired labor. These findings contrast with Benjamin (1992), that separation "places no restriction on the mix of family and hired labor" (p. 290) and that there is a non-separation when family and hired labor are imperfect substitutes.…”

“…Hired labor is frequently assumed to be a perfect substitute for family labor in the literature (Benjamin, 1992). This assumption makes it difficult to determine a unique solution for hired labor and on-farm family labor.…”

“…Our analytical framework extends the income-leisure model of Benjamin (1992), that treats family and hired labor as perfect substitutes. Benjamin tested empirically for the optimal decisions of farm households, and found empirical results in support of the separation hypothesis.…”

“…Investigating the separation proposition is important because separation allows for independent estimation of production and consumption, on the one hand, and serves as a foundation for the separate supply and demand analyses in the neoclassical economics, on the other. In a seminal contribution, Benjamin (1992) raised an important issue concerning whether the validity of the separation hypothesis ceases to hold when "family and hired labor are not perfect substitutes in production" (p. 290). One question of interest is: Would studies showing that family and hired labor are imperfect substitutes be sufficient to undermine the separation proposition?…”

Choix occupationnels et offre de travail lorsque les salaires sont fonction des heures travaillées

“…Les heures travaillées dans les deux secteurs sont supposées être parfaitement substituables afin de simplifier le modèle. Bien que cette hypothèse soit arbitraire, elle a aussi été utilisée dans le contexte de la production domestique par Gronau (1977) ainsi que dans le contexte du marché du travail agricole (rural) dans les pays en voie de développement par Rosenzweig (1980) et Benjamin (1992) 7 . En théorie, cette hypothèse pourrait être relâchée tout en permettant aux salaires de dépendre du nombre d'heures de travail.…”