Health Insurance and Joint Off‐Farm Labor Allocation Decisions of Farm Families

Abstract

Farm operators and spouses have increasingly engaged in off-farm work in recent years. Many studies have analyzed the role of government payments; however, little is known about the impact of health insurance coverage. This study builds on previous literature by using copulas to test for dependence in the labor allocation decisions of the operator and spouse, addressing the importance of fringe benefits to the farm household, and determining how these considerations affect our knowledge of the impact of government payments on off-farm labor. The results indicate that the off-farm hours worked by the operator and spouse are dependent. We then find significant evidence of endogeneity in the health insurance coverage variable. Using the predicted probability of insurance coverage, we find a positive and highly significant relationship with the hours worked off-farm. Further, we find that both coupled and decoupled payments are negatively correlated with the hours worked off-farm.