An econometric application of the theory of the farm-household

An econometric model of household production, consumption and labor supply behavior for a semicommercial farm with a competitive labor market is presented, using a Cobb-Douglas specification for the production function and a modified linear expenditure system. The model, estimated from primary, cross-sectional Malaysian data, is used to analyze the impact of migration, output price intervention and technological change on the agricultural sector. In doing so, the wage rate is treated as an endogenous variable to be determined by the interaction of aggregate labor demand and supply curves obtained from the estimated microfunctions. The policy significance of an integrated treatment of production and consumption decisions to the theory of the household is demonstrated. Mathematical models are included. 21 references.

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