Hostname: page-component-78c5997874-t5tsf Total loading time: 0 Render date: 2024-11-08T07:51:50.548Z Has data issue: false hasContentIssue false

The Impact of Human Capital on Farm Operator Household Income

Published online by Cambridge University Press:  15 September 2016

Hisham El-Osta*
Affiliation:
Economic Research Service, Hisham El-Osta is an U.S. Department of Agriculture, in Washington, D.C.
Get access

Abstract

Data from the 2006 Agricultural Resource Management Survey and multivariate regression procedures are used to examine the role of human capital in impacting the incomes of farm households. The paper uses an “adjusted” concept of income where government payments are subtracted from total household income thus allowing for the utilization of government payments as a potential control variable in the regression models. Findings indicate a significant and positive role for higher education except for farm households at the very lower and upper ends of the income distribution.

Type
Contributed Papers
Copyright
Copyright © 2011 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Adkins, L.C., and Carter Hill, R. 2004. “Bootstrap Inferences in Heteroscedastic Sample Selection Models: A Monte Carlo Investigation. “Paper presented at the 74th meeting of the Southern Economic Association, New Orleans, LA (November 22).Google Scholar
Ahearn, C.M., El-Osta, H.S., and Dewbre, J. 2006. “The Impact of Coupled and Decoupled Government Payments on Off-Farm Labor Participation of U.S. Farm Operators.American Journal of Agricultural Economics 88(2): 393408.Google Scholar
Ahearn, C.M., and Gibbs, R. 2009. “Farm Household Economics and Well-Being: Beginning Farmers, Demographics, and Labor Allocations.” Available at http://www.ers.usda.gov/briefing/wellbeing/demographics.htm (accessed July 1, 2009).Google Scholar
Ahearn, C.M., and Gibbs, R. 2010. “Farm Household Economics and Well-Being: Farm Household Income.” Available at http://www.ers.usda.gov/Briefing/WellBeing/farmhouseincome.htm (accessed July 1, 2009).Google Scholar
Ahearn, C.M., Perry, J.E., and El-Osta, H.S. 1993. “The Economic Well-Being of Farm Operator Households, 1988–90.” AER No. 666, Economic Research Service, U.S. Department of Agriculture, Washington, D.C.Google Scholar
Altonji, J.G., and Doraszelski, U., 2001. “The Role of Permanent Income and Demographics in Black/White Differences in Wealth.” Working Paper No. 8473, National Bureau of Economic Research, Cambridge, MA.Google Scholar
Angrist, J.D., and Krueger, A.B. 1991. “Does Compulsory School Attendance Affect Schooling and Earnings?Quarterly Journal of Economics 106(4): 9791014.Google Scholar
Astone, N.M., Nathanson, C.A., Schoen, R., and Kim, Y.J. 1999. “Family Demography, Social Theory, and Investment in Social Capital.Population and Development Review 25(1): 131.Google Scholar
Baguio, C.B. 2009. “Performance of Median and Least Squares Regression for Slightly Skewed Data.World Academy of Science, Engineering and Technology 53: 226230.Google Scholar
Barnes, M.L., and Hughes, A.W. 2002. “A Quantile Regression Analysis of the Cross Section of Stock Market Returns.Federal Reserve Bank, Boston, MA. Available at http://www.bos.frb.org/economic//wp/wp2002/wp022.pdf (accessed February 8, 2009).Google Scholar
Becker, G.S. 1962. “Investment in Human Capital: A Theoretic Analysis.Journal of Political Economy 70(5): 949.Google Scholar
Becker, G.S. 1966. “Human Capital and the Personal Distribution of Income: An Analytical Approach.National Bureau of Economic Research, New York. Google Scholar
Becker, G.S. 1975. Human Capital. National Bureau of Economic Research, New York.Google Scholar
Becker, G.S. 1994. Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education (3rd edition). Chicago, IL: University of Chicago Press. Google Scholar
Becker, G.S. 1995. “Human Capital and Poverty Alleviation.” HRO Working Papers, World Bank, Washington, D.C. Available at http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1995/03/01/000009265_3970702134116/Rendered/PDF/multi0page.pdf (accessed February 8, 2009).Google Scholar
Ben-Porath, Y. 1967. “The Production of Human Capital and the Life Cycle of Earnings.Journal of Political Economy 75(4): 352365.Google Scholar
Blank, R.M. 1997. It Takes a Nation: A New Agenda for Fighting Poverty. Princeton, NJ: Princeton University Press.Google Scholar
Bound, J., Jaeger, D.A., and Baker, R.M. 1995. “Problems with Instrumental Variables Estimation When the Correlation Between the Instruments and the Endogenous Explanatory Variables Is Weak.Journal of the American Statistical Association 90(430): 443450.Google Scholar
Box, G.E.P., and Cox, D.R. 1964. “An Analysis of Transformations.Journal of the Royal Statistical Society (Series B: Methodological) 26(20): 211252.Google Scholar
Breusch, T.S., and Pagan, A.R. 1979. “A Simple Test for Heteroscedasticity and Random Coefficient Variation.Econometrica 47(5): 12871294.Google Scholar
Buchinsky, M. 1994. “Changes in the U.S. Wage Structure 1963–1987: Application of Quantile Regression.Econometrica 62(2): 405458.Google Scholar
Buchinsky, M. 1995. “Estimating the Asymptotic Covariance Matrix for Quantile Regression Models: A Monte Carlo Study.Journal of Econometrics 68(2): 303338.Google Scholar
Buchinsky, M. 1998. “Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research.Journal of Human Resources 33(1): 88126.Google Scholar
Burbidge, J.B., Magee, L., and Robb, A.L. 1988. “Alternative Transformations to Handle Extreme Value of the Dependent Variable.Journal of the American Statistical Association 83(401): 123127.Google Scholar
Card, D. 1994. “Earnings, Schooling, and Ability Revisited.” NBER Working Paper No. 4832, National Bureau of Economic Research, Cambridge, MA. Available at http://www.nber.org/papers/w4832.pdf (accessed July 12, 2009).CrossRefGoogle Scholar
Carneiro, P., and Heckman, J. 2003. “Human Capital Policy.” In Heckman, J. and Krueger, A., eds., Inequality in America: What Role for Human Capital Policies? Cambridge, MA: MIT Press.Google Scholar
Carroll, C.D., Dynan, K.E., and Krane, S.D. 2003. “Unemployment Risk and Precautionary Wealth: Evidence from Households’ Balance Sheets.Review of Economics and Statistics 85(3): 586604.Google Scholar
Chang, H., Lambert, D.M., and Mishra, A. 2008. “Does Participation in the Conservation Reserve Program Impact the Economic Well-Being of Farm Households?Agricultural Economics 38(2): 201212.Google Scholar
Chen, M.Y., Lin, F.L., and Chang, C.K. 2009. “Relations Between Health Care Expenditure and Income: An Application of Local Quantile Regressions.Applied Economics Letters 16(2): 177181.Google Scholar
Coad, A., and Rao, R. 2006. “Innovation and Market Value: A Quantile Regression Analysis.Economics Bulletin 15(13): 110.Google Scholar
Coleman, J.S. 1988. “Social Capital in the Creation of Human Capital.American Journal of Sociology 94(S1): S95S120.Google Scholar
Coleman, J.S. 1990. Foundations of Social Theory. Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
Deaton, A.S. 1989. “Rice Prices and Income Distribution in Thailand: A Non-Parametric Analysis.Economic Journal 99(395): 137.Google Scholar
Deavers, K.L., and Hoppe, R.A. 1992. “Overview of the Rural Poor in the 1980s.” In Duncan, C.M., ed., Rural Poverty in America. Westport, CT: Auburn House.Google Scholar
De Frahan, B., Nkunzimana, T., De Blander, R., Gaspart, F., and Sumner, D.A. 2008. “Farm Household Incomes and Reforming the CAP.” Paper presented at the 109th EAAE seminar, Viterbo, Italy (November 20–21).Google Scholar
Dewbre, J., and Mishra, A. 2002. “Farm Household Incomes and U.S. Government Program Payments.” Paper presented at the annual meeting of the American Agricultural Economic Association, Long Beach, CA (July 28–31).Google Scholar
Dooley, D.M., and Gottschalk, P. 1984. “Earnings Inequality among Males in the United States: Trends and the Effect of Labor Growth.Journal of Political Economy 92(1): 5989.Google Scholar
Dubman, R. 2000. “Variance Estimation with USDA's Farm Costs and Returns Surveys and Agricultural Resource Management Study Surveys.” Staff Report No. AGES 00–01, Economic Research Service, U.S. Department of Agriculture, Washington, D.C.Google Scholar
Efron, B., and Tibshirani, R.J. 1994. An Introduction to the Bootstrap. New York: Chapman and Hall.CrossRefGoogle Scholar
El-Osta, H.S., Mishra, A.K., and Ahearn, M.C. 2004. “Labor Supply by Farm Operator Households under ‘Decoupled’ Farm Program Payments.Review of Economics of the Household 2(4): 367385.Google Scholar
El-Osta, H.S., Mishra, A.K., and Morehart, M.J. 2007. “Determinants of Economic Well-Being among U.S. Farm Operator Households.Agricultural Economics 36(3): 201304.Google Scholar
Freeman, R.B. 1979. “The Effects of Demographic Factors on Age-Earnings Profiles.Journal of Human Resources 14(3): 289318.Google Scholar
Friedman, M., and Kuznets, S. 1945. Income from Independent Professions. New York: National Bureau of Economic Research.Google Scholar
Furtan, W.H., Van Kooten, G.C., and Thompson, S.J. 1985. “The Estimation of Off-Farm Supply Functions in Saskatchewan.Journal of Agricultural Economics 36(2): 212220.Google Scholar
Gardner, B.L. 2000. “Economic Growth and Low Income in Agriculture.American Journal of Agricultural Economics 82(5): 10591074.Google Scholar
Gisser, M. 1965. “Schooling and the Farm Problem.Econometrica 33(3): 582692.Google Scholar
Goetz, S.J. 1993. “Human Capital and Rural Labor Issues.American Journal of Agricultural Economics 75(5): 11641168.Google Scholar
Goodwin, B.K., Mishra, A.K., and Ortalo-Magne, F.N. 2003. “What's Wrong with Our Models for Agricultural Land Values?American Journal of Agricultural Economics. 85(3): 744752.Google Scholar
Green, D.A. 2007. “A Cautionary Discussion about Relying on Human Capital Policy to Meet Redistributive Goals.Canadian Public Policy 33(3): 397418.Google Scholar
Greene, W.H. 2002. Econometric Analysis (5th edition). Englewood Cliffs, NJ: Prentice-Hall. Google Scholar
Griliches, Z. 1964. “Research Expenditures, Education and the Aggregate Agricultural Production Function.American Economic Review 54(6): 961974.Google Scholar
Gundersen, C., and Offutt, S. 2005. “Farm Poverty and Safety Nets.American Journal of Agricultural Economics 87(4): 885899.Google Scholar
Hahn, J. 1995. “Bootstrapping Quantile Regression Estimators.Econometric Theory 11(1): 105121.Google Scholar
Hao, L.D., and Naiman, Q. 2007. Quantile Regression. Thousand Oaks, CA: Sage Publications.Google Scholar
Harwood, J., Heifner, R., Cobble, K., Perry, J., and Somwaru, A. 1999. “Managing Risk in Farming: Concepts, Research, and Analysis.” AER No. 774, Economic Research Service, U.S. Department of Agriculture, Washington, D.C.Google Scholar
Haveman, R., Wolfe, B., and Spaulding, J. 1991. “Childhood Events and Circumstances Influencing High School Completion.Demography 28(1): 133157.Google Scholar
Heckman, J. 2005. “Inequality in America: What Role for Human Capital Policies.Focus 23(3): 110.Google Scholar
Hill, M., and Duncan, G.J. 1987. “Parental Family Income and the Socioeconomic Attainment of Children.Social Science Research 16(1): 3973.Google Scholar
Hoppe, R.A., and Bluestone, H. 1987. “Black Farmers and the Economic and Social Conditions Where They Live: Some Policy Implications.Southern Rural Sociology 5(1): 4158.Google Scholar
Huber, P.J. 1967. “The Behavior of Maximum Likelihood Estimates Under Nonstandard Conditions.” In Le Cam, L.M. and Neyman, J., eds., Proceedings of the Fifth Berkeley Symposium on Mathematical Statistics and Probability. Berkeley, CA: University of California Press.Google Scholar
Huffman, W.E. 1972. “The Contribution of Education and Extension to Differential Rates of Change.” Unpublished Ph.D. thesis, University of Chicago, Chicago, IL.Google Scholar
Huffman, W.E. 1974. “Decision Making: The Role of Human Capital.American Journal of Agricultural Economics 55(1): 8597.Google Scholar
Huffman, W.E. 1977. “Allocative Efficiency: The Role of Human Capital.Quarterly Journal of Economics 91(1): 5979.Google Scholar
Huffman, W.E. 1980. “Farm and Off-Farm Work Decisions: The Role of Human Capital.Review of Economics and Statistics 62(1): 1423.Google Scholar
Huffman, W.E. 1981. “Black-White Human Capital Differences: Impact on Agricultural Productivity in the U.S. South.American Economic Review 71(1): 94107.Google Scholar
Huffman, W.E. 1985. “Human Capital, Adaptive Ability, and the Distributional Implications of Agricultural Policy.American Journal of Agricultural Economics 67(2): 429434.Google Scholar
Katchova, A.L. 2005. “The Farm Diversification Discount.American Journal of Agricultural Economics 87(4): 984994.Google Scholar
Key, N., and Roberts, M.J. 2009. “Nonpecuniary Benefits to Farming: Implications for Supply Response to Decoupled Payments.American Journal of Agricultural Economics 91(1): 118.Google Scholar
Khaldi, N. 1975. “Education and Allocative Efficiency in U.S. Agriculture.American Journal of Agricultural Economics 57(4): 650657.Google Scholar
Kmenta, J. 1986. Elements of Econometrics. New York: Macmillan Publishing Company.Google Scholar
Koenker, R., and Bassett, G. Jr. 1978. “Regression Quantiles.Econometrica 46(1): 3350.Google Scholar
Kott, P.S. 1997. “Using the Delete-a-Group Jackknife Variance Estimator in NASS Surveys.National Agricultural Statistics Service, U.S. Department of Agriculture, Washington, D.C. Google Scholar
Kusmin, L. 2007. “Rural America at a Glance.Economic Research Service, U.S. Department of Agriculture, Washington, D.C. Available at http://www.ers.usda.gov/Publications/EIB31/EIB31.pdf (accessed July 1, 2009).Google Scholar
Lass, D.A., Findeis, J.L., and Hallberg, M.C. 1991. “Factors Affecting the Supply of Off-Farm Labor: A Review of the Empirical Evidence.” In Hallberg, M.C., Findeis, J.L., and Lass, D.A., eds., Multiple Job-Holding among Farm Families. Ames, IA: Iowa State University Press.Google Scholar
Lazear, E. 1980. “Family Background and Optimal Schooling Decisions.Review of Economics and Statistics 62(1): 4251.Google Scholar
Long, J.S. 1997. Regression Models for Categorical and Limited Dependent Variables. Thousand Oaks, CA: Sage Publications.Google Scholar
Luh, Y.H., and Stefanou, S. 1993. “Learning-by-Doing and the Sources of Productivity Growth: A Dynamic Model with Application to U.S. Agriculture.Journal of Productivity Analysis 4(1): 353370.Google Scholar
Mallar, C.D. 1977. “The Estimation of Simultaneous Probability Models.Econometrica 45(7): 17171722.Google Scholar
Manski, C.F. 2000. “Economic Analysis of Social Interaction.Journal of Economic Perspectives 14(3): 115136.Google Scholar
Marchant, M. 1997. “Bargaining Models for Farm Household Decision Making: Discussion.American Journal of Agricultural Economics 79(2): 602604.Google Scholar
Mincer, J. 1962. “On-the-Job Training: Costs, Returns, and Some Implications.Journal of Political Economy 70(5): 5079.Google Scholar
Mincer, J. 1974. Schooling, Experience, and Earnings. New York: Columbia University Press.Google Scholar
Mincer, J., and Polacheck, S. 1974. “Family Investments in Human Capital: Earnings of Women.Journal of Political Economy 82(2): S76S108.Google Scholar
Mishra, A.K., El-Osta, H., and Johnson, J.D. 1999. “Factors Contributing to Earning Success of Cash Grain Farms.Journal of Agricultural and Applied Economics 31(3): 623637.Google Scholar
Mishra, A.K., El-Osta, H.S., Morehart, M.J., Johnson, J.D., and Hopkins, J.W. 2002. “Income, Wealth, and the Economic Well-Being of Farm Households.” AER No. 812, Economic Research Service, U.S. Department of Agriculture, Washington, D.C.Google Scholar
Nelson, R.R., and Phelps, E.S. 1966. “Investment in Humans, Technological Diffusion, and Economic Growth.American Economic Review 56(1/2): 6975.Google Scholar
Neter, J. 1985. Applied Linear Statistical Models-Regression Analysis of Variance, and Experimental Design (2nd edition). Homewood, IL: Richard D. Irwin, Inc. Google Scholar
Newbery, D.M.G., and Stiglitz, J.E. 1985. The Theory of Commodity Price Stabilization. Oxford: Oxford University Press.Google Scholar
Parker, T. 2005. “Low Earnings But Steady Job Growth in Low-Employment Counties.Amber Waves 3(4): 2027.Google Scholar
Pence, K.M. 2006. “The Role of Wealth Transformations: An Application to Estimating the Effect of Tax Incentives on Savings.Berkeley Electronic Journal of Economic Analysis and Policy 5(1): 124. Available at http://www.bepress.com/bejeap/contributions/vol5/iss1/art20 (accessed February 20, 2009).Google Scholar
Purdy, B.M., Langemeier, M.R., and Featherstone, A.M. 1997. “Financial Performance, Risk, and Specialization.Journal of Agricultural and Applied Economics 29(1): 149161.Google Scholar
Ramsey, J.B. 1969. “Tests for Specification Errors in Classical Linear Least Squares Regression Analysis.Journal of the Royal Statistical Society (Series B: Methodological) 31(2): 350371.Google Scholar
Ritzen, J.M., and Winkler, D.R. 1977. “The Production of Human Capital Over Time.Review of Economics and Statistics 59(4): 427437.Google Scholar
Rivers, D., and Vuong, Q.H. 1988. “Limited Information Estimators and Exogeneity Tests for Simultaneous Probit Models.Journal of Econometrics 39(3): 347366.Google Scholar
Robison, L.J., and Barry, P.J. 1987. The Competitive Firm's Response to Risk. New York: Macmillan Publishing Co.Google Scholar
Robison, L.J., and Siles, M.E. 1999. “Social Capital and Household Income Distributions in the United States: 1980, 1990.Journal of Socio-Economics 28(1): 4393.Google Scholar
Roe, T., Somwaru, A., and Diao, X. 2002. Do Direct Payments Have Intertemporal Effects on U.S. Agriculture? International Food Policy Research Institute, Washington D.C. Available at http://ageconsearch.umn.edu/bitstream/16308/1/tm020104.pdf (accessed August 5, 2009).Google Scholar
Rousseeuw, P.J., and van Zomeren, B.C. 1990. “Unmasking Multivariate Outliers and Leverage Points.Journal of the American Statistical Association 85(411): 633639.Google Scholar
Schiller, B.R. 2004. The Economics of Poverty and Discrimination. Upper Saddle River, NJ: Prentice Hall.Google Scholar
Schultz, T.W. 1960. “Capital Formation and Education.Journal of Political Economy 68(5): 571583.Google Scholar
Schultz, T.W. 1964. Transforming Traditional Agriculture. New Haven, CT: Yale University Press.Google Scholar
Schultz, T.W. 1972. “The Increasing Economic Value of Human Time.American Journal of Agricultural Economics 54(5): 843850.Google Scholar
Schultz, T.W. 1975. “The Value of the Ability to Deal with Disequilibria.Journal of Economic Literature 13(3): 827846.Google Scholar
Smith, R.J., and Blundell, R.W. 1986. “An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply.Econometrica 54(2): 679685.CrossRefGoogle Scholar
Smith, A., Morrison Paul, C.J., Goe, W.R., and Kenney, M. 2004. “Computer and Internet Use by Great Plains Farmers.” Working Paper No. 04–010, Department of Agricultural and Resource Economics, University of California, Davis, CA.Google Scholar
Theil, H. 1971. Principles of Econometrics. New York: John Wiley and Sons.Google Scholar
U.S. Department of Agriculture. 2006. “Agricultural Resource Management Survey, 2006.National Agricultural Statistics Service, U.S. Department of Agriculture, Washington, D.C. Available at http://www.ers.usda.gov/Briefing/ARMS/ (accessed December 10, 2008).Google Scholar
Weber, B., Marre, A., Fisher, M., Gibbs, R., and Cromartie, J. 2007. “Education's Effect on Poverty: The Role of Migration.Review of Agricultural Economics 29(3): 437445.Google Scholar
Welch, F. 1970. “Education in Production.Journal of Political Economy 78(1): 3559.Google Scholar
White, H. 1980. “A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity.Econometrica 48(4): 817838.Google Scholar
Whitener, L., and Parker, T. 2007. “Policy Options for a Changing Rural America.Amber Waves 5 (May): 5865.Google Scholar
Williams, R.L. 2000. “A Note on Robust Variance Estimation for Cluster-Correlated Data.Biometrics 56(2): 645646.Google Scholar
Wilson, K. 2001. “The Determinants of Educational Attainment: Modeling and Estimating the Human Capital Model and Education Production Function.Southern Economic Journal 67(3): 518551.Google Scholar
Wooldridge, J.M. 2002. Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press.Google Scholar
Wozniak, G.D. 1984. “The Adoption of Interrelated Innovation: A Human Capital Approach.Review of Economics and Statistics 66(1): 7079.Google Scholar