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Modeling Household Responses in Agricultural Systems for Enhanced Economic Resilience

This research addresses the challenges faced by small-scale farms, where a significant proportion of the agricultural workforce is underemployed and reliant on insufficient livelihoods. It emphasizes the need for a comprehensive model framework to analyze household responses to economic changes. The study will explore consumption, production, labor allocation, and hired labor demand within the context of imperfect markets. Insights derived from behavioral patterns and future policy scenarios are essential for forecasting and assessing impacts on farm households, enabling informed decision-making for small farmers.

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Modeling Household Responses in Agricultural Systems for Enhanced Economic Resilience

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  1. Household-farm systems‘ economic responses Stephan Brosig*, Michael Grings** * Leibniz Institute of Agricultural Development in Central and Eastern Europe, Halle, Germany ** Martin-Luther-University Halle-Wittenberg, Institute of Agricultural and Food Science

  2. Background, Motivation • Small scale farms do not provide sufficient base for many families‘ livelihood • Over a third of the current agricultural workforce underemployed • Vast changes in external conditions and agricultural structures • Pending policy changes (alternative options) • => knowledge of behavioural patterns needed for forecasts and assessment of policy impacts

  3. Research goal • A model framework to analyze farm-household responses: • Consumption, production and market demand and ­supply of goods • Demand and supply of production inputs and factors • Allocation of family time to leisure, farm- and off-farm work • Demand for hired labour

  4. Structure of presentation • Approach: Household model • Data • Estimation and analyses planned • Outlook and further issues

  5. Household models • Behavioural assumption: • Households decide simultaneously on consumption, production, and labour supply when • Markets on which producers compete with consumers do not function perfectly and/or • Family and market labour and/or purchased and self-produced goods are no perfect substitutes • Consequence: • Interdependent (nonseparable) model required

  6. Household models • Literature: selected studies estimating farm-household responses:

  7. Data • RCRE FSRS, Stat.YB (f. prices), Zhejiang, Hubei, Yunnan, 1995-2006??? • Vars. • needed:

  8. Aggregation issues & analyses planned • With this first aggregation: • Testing the iterative approach (does it make a difference?) • Overall responses (of prod./inp. dmd/lab. spl on e.g. price (tax-) changes • Welfare effects of price changes • Simulations yielding distributional results / w. covariates • Disaggregation, extension: • Labour market • Disaggregation for more specific results and better fit

  9. Present state & further issues • Data work and experiments with simple demand models • Plans: • Utilise Panel structure • Data inconsistencies over time

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