Income risk and allocation of labour time: an empirical investigation

This study investigates the behaviour of risk averse farm operators in resp onse to farm income and employment variability. Economic theory maintains t hat 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 opera tors in North Carolina and Kansas using fixed and random effects models. Of f-farm employment of farm operators is also found to be significantly influ enced by age, efficiency, asset value, and off-farm wage rate.