OFF-FARM WORK DECISIONS OF FARM COUPLES - ESTIMATING STRUCTURAL SIMULTANEOUS-EQUATIONS WITH ORDERED CATEGORICAL DEPENDENT-VARIABLES

We estimate a full system of structural farm and off-farm labor supply equations of farm couples as a set of simultaneous equations with cat egorical dependent variables. In a first step, the reduced form is est imated by ordered probit with unknown thresholds. Then, the identified structural coefficients are recovered from the reduced-form coefficie nts through minimum distance estimation. Using census data from Israel , we find that for men, a one-hour increase in farm labor supply cause s a one-hour decrease in off-farm labor supply, but not for women. Thi s could not have been found without estimating structural coefficients .