OPTIMAL TIMING OF FARM TRANSFERAL FROM PARENT TO CHILD

When farm income is first increasing and then decreasing in the operat or's age, the timing of farm transferal from parent to child is optima lly determined by families who seek to maximize joint income or utilit y. Using a sample of Israeli farms in which the operation of the farm changed from parent to child between 1971 and 1981, equations of trans fer time and child's education are derived. A simultaneous equation, c ensored regression model is estimated using a two-stage method. Result s support the theoretical predictions that transfer time is decreasing with parent's age and with child's schooling, and increasing with par ent's experience.