This study investigates the behaviour of risk averse farm operators in response to farm income and employment variability. Economic theory maintains that greater farm income variability should increase off-farm labour supply. On the other hand greater off-farm employment variability should decrease off-farm labour supply. This effect is confirmed for a sample of farm operators in North Carolina and Kansas using fixed and random effects models. Off-farm employment of farm operators is also found to be significantly influenced by age, efficiency, asset value, and off-farm wage rate.
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Mishra et al. (1998) studied this question.
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