Farm Income Variability and the Supply of Off‐Farm Labor

TLDR

Risk‑averse farmers are expected to supply more off‑farm labor when farm income is more variable. In Kansas, higher farm income variability is associated with increased off‑farm labor, and factors such as farm experience, size, leverage, efficiency, education, and government support influence this relationship, suggesting that reduced support could raise off‑farm employment.

Abstract

Abstract If farmers are risk averse, greater farm income variability should increase off‐farm labor supply. This effect is confirmed for a sample of Kansas farmers. Off‐farm employment of farmers and their spouses is also found to be significantly influenced by farm experience, off‐farm work experience, farm size, leverage, efficiency, and farm‐specific education. In addition, farm operators and spouses who receive significant income support through government farm programs are less likely to work off the farm. This may suggest that policy changes reducing farm income support payments may increase off‐farm employment of farmers and their spouses.