Empirical Estimation of Agricultural Household Model

This book includes three essays on econometrics of the agricultural household model. The first essay provides a new method to derive the shadow wage and shadow income. The method is based on the observation that the shadow wage is the marginal product of labor at the optimal point of both farm and household production functions. Thus, both the shadow wage and shadow income can be derived without estimating the farm production function. The second essay proposes an empirical agricultural household model which is robust to market imperfections and tractable enough for simulation and parameter estimation. The model is used to study the effects of trade liberalization in Vietnam from 1993 to 1998. The third essay offers a new separation hypothesis test which allows the researcher to assign each individual farmer to the appropriate model rather than just assigning a model to all farmers in a given sample. The method comes from the structural break literature in time-series econometrics. A search dimension is created with cross-section data, which acts like a time dimension in time-series data, so that the method can be applied to cross-section data