Welfare implications of reduced government subsidies to farm families: Accounting for fringe benefits

Jeremy M. D'Antoni, Ashok K. Mishra

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

In the past three decades, farm families have relied on government payments and off-farm income to reduce income risk and increase total household income. Studies have shown that, as the income effect dominates, government payments tend to reduce off-farm labor of farm operators and spouses. But that may not be true if one accounts for fringe benefits associated with off-farm employment. Additionally, with looming budget deficits and the possibility of a reduction in decoupled government payments, farm families may be facing an altered economic environment. Our study addresses this issue by examining the links between government farm program payments and the ever-important role of fringe benefits in the off-farm employment of farm couples. Results from farm-level data actually show that the marginal effect of government payments on hours worked off-farm will decrease in magnitude when accounting for fringe benefits, ceteris paribus. These results support the notion that farm households' welfare loss stemming from reduced decoupled payments may be overstated when models exclude fringe benefits from the estimation of off-farm labor supply.

Original languageEnglish (US)
Pages (from-to)191-202
Number of pages12
JournalAgricultural Economics (United Kingdom)
Volume44
Issue number2
DOIs
StatePublished - Mar 1 2013
Externally publishedYes

Keywords

  • Agricultural policy
  • Decoupled government payments
  • Farm households
  • Fringe benefits
  • J22
  • J43
  • Q12
  • Q18
  • Tobit
  • Welfare loss

ASJC Scopus subject areas

  • Agronomy and Crop Science
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Welfare implications of reduced government subsidies to farm families: Accounting for fringe benefits'. Together they form a unique fingerprint.

Cite this