New Economics Papers
on Agricultural Economics
Issue of 2005‒11‒19
eight papers chosen by

  1. How Much “Safety” Is Available under the U.S. Proposal to the WTO? By Babcock, Bruce A.; Hart, Chad E.
  3. Expected Wages and Other Labor Market Factors Affecting the Labor Force Decisions of Nurses in the State of Iowa By Doorenbos, Todd; Imerman, Mark D.; Orazem, Peter
  4. Health Effects of Child Work: Evidence from Rural Vietnam By Owen A O'Donnell; Furio C. Rosati
  5. Economics of technological change and the natural environment: how effective are innovations as a remedy for resource scarcity? By Lucas Bretschger
  6. Natural resource scarcity and long-run development: central mechanisms when conditions are seemingly unfavourable By Lucas Bretschger
  7. Statistical Moments Analysis of Production and Profits in Multi-Product Cournot Oligopoly By Hennessy, David A.; Lapan, Harvey E.
  8. The environmental Kuznets curve : evidence from time series data for Germany By Hannes Egli

  1. By: Babcock, Bruce A.; Hart, Chad E.
    Abstract: Critics of the U.S. proposal to the World Trade Organization (WTO) made in October 2005 are correct when they argue that adoption of the proposal would significantly reduce available support under the current farm program structure. Using historical prices and yields from 1980 to 2004, we estimate that loan rates would have to drop by 9 percent and target prices would have to drop by 10 percent in order to meet the proposed aggregate Amber Box and Blue Box limits. While this finding should cheer those who think that reform of U.S. farm programs is long overdue, it alarms those who want to maintain a strong safety net for U.S. agriculture. The dilemma of needing to reform farm programs while maintaining a strong safety net could be resolved by redesigning programs so that they target revenue rather than price. Building on a base of 70 percent Green Box income insurance, a program that provides a crop-specific revenue guarantee equal to 98 percent of the product of the current effective target price and expected county yield would fit into the proposed aggregate Amber and Blue Box limits. Payments would be triggered whenever the product of the season-average price and county average yield fell below this 98 percent revenue guarantee. Adding the proposed crop-specific constraints lowers the coverage level to 95 percent. Moving from programs that target price to ones that target revenue would eliminate the rationale for ad hoc disaster payments. Program payments would automatically arrive whenever significant crop losses or economic losses caused by low prices occurred. Also, much of the need for the complicated mechanism (the Standard Reinsurance Agreement) that transfers most risk of the U.S. crop insurance to the federal government would be eliminated because the federal government would directly assume the risk through farm programs. Changing the focus of federal farm programs from price targeting to revenue targeting would not be easy. Farmers have long relied on price supports and the knowledge that crop losses are often adequately covered by heavily subsidized crop insurance or by ad hoc disaster payments. Farmers and their leaders would only be willing to support a change to revenue targeting if they see that the current system is untenable in an era of tight federal budgets and WTO limits.
    Keywords: farm safety net, revenue targeting, U.S. farm programs, WTO.
    Date: 2005–11–07
  2. By: Hrabrin Bachev (Institute of Agricultural Economics, Sofia, Bulgaria)
    Abstract: This is the second paper from a series of articles on governing of different types of transactions in Bulgarian farming applying the framework of New Institutional and Transaction Cost Economics. It is based on a large scale microeconomic data from 194 typical commercial farms of different sizes and types from all regions of the country. This study concentrates on factors and modes for organization of labor supply in Bulgarian farms. Structure of kind of labor (permanent, seasonal, irregular, others), and type of labor use (in production, in administration, in management, for protection, others), and labor source (own labor, family labor, hired labor, cooperative members, others) in farms of different types and sizes has been determined. Microeconomic factors responsible for various organizational and contract choices for labor supply (own cultivation, using of family labor, hiring of workers, cooperation etc.) have been specified. Dominant governing modes have been explained by comparative advantages for saving on transacting costs (for finding partners, contracting, monitoring of hired labor, conflict resolutions, renewal of contracts etc). Limits of farm extension (optimization) through effective alternative (to outside labor supply) modes for “internal” service, and inputs, and land supply have been determined. Transaction costs economizing framework has been used through analysis of: types of wage formation (time based, output based, mixed) for different categories of labor; reasons for hiring labor (extension of business, support of own labor, support of family labor, replace of family labor, others); ways of application of hired labor (in production, in administration, in management, in protection, others); personality of different types of hired labor (relatives; close friends; known before hiring; unknown before first hiring; same persons every time; from universities, agricultural schools etc; others); frequency of experiencing problems leading to suspension of labor contracts; main reasons for conflicts with hired labor (lack of qualification; lack of desire for hard work; lack of entrepreneurial spirit; cheating, stealing etc); kind of contracts with different types of labor (informal, written) and extend of specifications of contract obligations; ways of income formation (fixed monthly wages, daily based, output based, based on final year results, others) of different categories of labor in crop, livestock, services and management. Relative level of farms transaction costs associated with labor supply (for finding needed labor, negotiation and contracting, for directing and monitoring of hired labor, for contract enforcement and disputing etc.) has been determined. Besides high governing costs associated with labor contracts other factors restricting farm enlargement of Bulgarian farms as present stage are: high enforcement costs of contracts in general, and enormous credit supply and marketing costs. According to estimate of farm managers most important factors for future development of farms relate to improvement of institutional environment (guaranteed marketing, enforcement of Laws and private contracts, macro-economic stability, legislation framework, access to free markets) and own and family experience in farm management.
    Keywords: type of labor and service contract, organization of labor, governing of labor and service supply, farm organization, transaction costs, transitional farming structure
    JEL: D1 D2 D3 D4
    Date: 2005–11–12
  3. By: Doorenbos, Todd; Imerman, Mark D.; Orazem, Peter
    Abstract: The Iowa Department of Public Health has undertaken several independent projects to evaluate various aspects of the labor environment affecting Iowa healthcare over the recent past. This research expands upon the results of these efforts to estimate the effects of a number of wage and nonwage factors on nurses’ decisions regarding where and how much to employment to seek within the nursing sector. Utilizing data collected through Department of Public Health surveys, average county-level wages for Registered Nurses, Licensed Practical Nurses, and unlicensed practitioners (nursing assistants) are estimated. Estimated county-level wages for each group are then matched with information on each county’s health care demand environment to estimate the influence of wage and type of employing firm upon nurses’ joint decisions regarding place of work and place of residence. Finally, average county wage estimates are combined with individual nurse data for 13 counties in North-central Iowa to evaluate the extent to which personal characteristics affect the labor-force decisions of RNs.
    Keywords: labor-force, wages, income, nurse, employment
    JEL: J0
    Date: 2005–11–08
  4. By: Owen A O'Donnell (University of Macedonia); Furio C. Rosati (UCW Project; Erasmus University Rotterdam - Department of Health Policy and Management)
    Abstract: We test whether work in childhood impacts on health. We focus on agricultural work, the dominant form of child work worldwide. Data are from the Vietnam Living Standards Survey, 1992-93 and 1997-98. We correct for both unobservable heterogeneity and simultaneity biases. Instruments include small area labour market and education conditions obtained from community level surveys. We use three indicators of health: body mass index; reported illness; and, height growth. There is clear evidence of a healthy worker selection effect. We find little evidence of a contemporaneous impact of child work on health but work undertaken during childhood raises the risk of illness up to five years later and the risk is increasing with the duration of work. There is no evidence that work impedes the growth of the child.
    Keywords: Child labour, health, Vietnam
    JEL: I12 J13 J22 J28 J43
    Date: 2004–04–07
  5. By: Lucas Bretschger (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: The paper aims to substantiate the importance of endogenous innovations when evaluating the compatibility of natural resource use and economic development. It explains that technological change has the potential to compensate for natural resource scarcity, diminishing returns to capital, poor input substitution, and material balance restrictions, but is limited by various restrictions like fading returns to innovative investments and rising research costs. It also shows how innovative activities are fostered by accurate price signals and research-favouring sectoral change. The simultaneous effects of increasing technical knowledge, decreasing resource inputs, and increasing world population largely determine the chances of long-run sustainable development. Consequently, future research has to be directed at a more thorough understanding of the mechanisms driving innovations in the presence of natural resource scarcity.
    Keywords: endogenous technological change, environment, natural resources, sustainability
    JEL: Q20 Q30 O41 O33
    Date: 2004–06
  6. By: Lucas Bretschger (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: Using a dynamic model with non-renewable natural resources and endogenous knowledge creation, the paper analyses economic development under conditions which are generally considered as most unfavourable. We assume poor substitution between primary input factors, positive population growth and a limited supply of materials in the static part of the framework, as well as natural resources being an essential input into R&D, and constant or decreasing returns to innovative activities in the dynamic part. It is shown that there is an inverse relationship between input substitution and growth-enhancing sectoral change and that labour supply supports economic dynamics through the knowledge-creation effect. A permanent increase in living standards is achievable under free market conditions, but adjustment costs and errors in long-term expectations might impede this development.
    Keywords: endogenous technological change, environment, natural resources, sustainability
    JEL: Q20 Q30 O41 O33
    Date: 2004–05
  7. By: Hennessy, David A.; Lapan, Harvey E.
    Abstract: Our context involves firms producing products at constant marginal costs, and behaving as Cournot oligopolists. When preferences are quasi-linear, we study the relationships between second moments of unit costs and second moments of firm-level production. Larger variance in unit costs of a product increases own output variance and variance of any other output. We also investigate how second moments of unit costs affect the first and second moments of profit across firms. Larger variance in unit costs can reduce profit variance, even for a single product oligopoly.
    Keywords: Complementarity; Covariance matrix; Separability
    JEL: C72 C8 C9 C6 C7 D0 D1 D2 D3 D4 D43
    Date: 2005–11–08
  8. By: Hannes Egli (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: In recent years, extensive literature on the Environmental Kuznets Curve lead- ing to optimistic policy conclusions has attracted great attention. However, the underlying cross-section estimations are not very reliable. Accordingly, this contribution uses time series data for a single country with dependable data quality : Germany. The results of the traditional reduced-form specification do not support the EKC hypothesis. However, with a specification in the tradi- tion of error correction models, which are more appropriate in the presence of non-stationary time series, it is found that the typical EKC pattern can be confirmed.
    Keywords: Environmental Kuznets Curve, Error Correction Model, Time Series Data
    JEL: Q00 Q20
    Date: 2004–09

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