LABOUR SUPPLY AND OFF-FARM WORK BY FARMERS: THEORY AND ESTIMATION

Off-farm employment has become increasingly important as an aspect of resource adjustment and a source of income in Australian agriculture. However, it is surprising that there is a paucity of work on this topic reported in the agricultural economics literature. Therefore, we have drawn upon recent developments in labour economics in order to investigate off-farm employment in Australia. A conceptual model of the allocation of a farmer's labour between farm and off-farm work is developed and applied to cross-sectional data from the Australian Agricultural and Grazing Industries Survey. A Tobit maximum likelihood procedure is utilised to test the influences of the life cycle, level of human capital, wealth, non-wage income and farm income on the off-farm labour supply of farmers.