HOUSEHOLD TIME ALLOCATION AND ENDOGENOUS FARM STRUCTURE: IMPLICATIONS FOR THE DESIGN OF AGRICULTURAL POLICIES

We evaluate relationships among time allocation decisions for farm operators and their spouses and endogenous farm structure. We consider two aspects of farm structure{ farm scale, represented by acreage operated and harvested, and farm scope, which is represented by an index of diversification. We are particularly interested in the role of policy expectations as a factor influencing labor decisions and farm structure. Our results indicate that farm structure and household time allocations are significantly related to one another. Operators on larger and more diversified farms tend to work less off the farm. Size may be endogenous to off-farm work decisions in that farms tend to be smaller when farmers pursue off-farm work opportunities, though the converse is true for the operators' spouses. Direct (decoupled) payments tend to be associated with less off-farm work by spouses, a smaller scale of production, and more diversification. This result has relevance to the ongoing debate over the production neutrality of decoupled payments. Coupled payments tend to be associated with more off-farm work by spouses and larger farms, thus suggesting a positive effect on farm labor.