Opportunity Cost Of Labor Research Articles

ECONOMIC VIABILITY OF DAIRY FARMS IN SELECTED EUROPEAN UNION COUNTRIES

The aim of the study was to assess the economic viability of farms specializing in dairy cattle breeding in countries with the highest share of milk production in the EU. Viability was measured using two models based on the opportunity cost of unpaid labour and equity. The study used a comparative analysis of farm viability indicators calculated on the basis of data collected in the FADN system in 2008-2017, taking changes in income in the short and long term into account. The research indicates that farms with greater economic potential were characterized by higher economic viability. Italian and Polish farms with an economic size of EUR 100,000-500,000 were considered viable and developing, as well as Italian and German farms from the group of over EUR 500,000. British and French farms were characterized by a lack of viability. The results were largely influenced by differences in the level of average wages in the national economy of the analysed countries, inputs of unpaid labour and the level and volatility of income.

Implications of labor supply specifications in CGE models: A demonstration for employment of Palestinian labor in Israel and its impact on the West Bank economy

Results of general equilibrium models are sensitive to model parameterization and specification. The role of macroeconomic closures and the effect of trade elasticities are documented in the literature, but there is no systematic analysis of the implications of different labor supply specifications for the effect of shocks to labor markets. This study analyzes these implications, using data for the West Bank economy and a general equilibrium model with four different labor market specifications. The findings indicate that increased Palestinian employment in Israel leads to changes in real GDP in the range of −1.8% to ＋3.4%, depending on the model specification. This wide range of effects on macroeconomic aggregates stems from the definition of the production boundary, the implicit assumptions on the opportunity cost of labor in activities outside the production boundary, and the conditions for a transfer of labor across the boundary. Economic theory indicates that the labor-leisure trade-off specification is the most consistent framework for modeling labor supply decisions. However, in the absence of data for activities outside the production boundary of the system of national accounts, the fixed labor supply (full-employment) assumption may be the second-best alternative, although it risks overstating the changes in real wage rates. The surplus labor and upward-sloping labor supply curve specifications both tend to understate the increases in wage rates and overstate the welfare gains.

English

This paper analyses the effect of labor opportunity cost on economic profitability of fertilizer microdosing (FM) in Burkina Faso. In order to assess the incremental change in net income when the investment cost increases and takes into account labor opportunity cost, the marginal value cost ratio (MVCR) approach is used. Using data from farmer’s field, the results showed that for both crops, the median yield of the fertilizer microdosing plots is 500 kg.ha-1, which is slightly higher than yield from recommended dose plots. Moreover, the rate of fertilizer microdosing plots of millet with a marginal value cost ratio above 2 shifts from 50% (without labor opportunity cost) to 41% (with labor opportunity cost) and not even one recommended dose plots reached this threshold. These findings argued that fertilizer microdosing adopters remain economically profitable for farmers compared to traditional practices despite the opportunity cost of labor. However, because of its importance in the process of fertilizer microdosing adoption, labor costs must be included in its economic evaluation. The results of this study confirm the need to accelerate mechanization of fertilizer microdosing application. Key words: Fertilizer microdosing (FM), labor, marginal value cost ratio, Burkina Faso. &nbsp

Excess churn in integrated labor markets

The common European labor market enhances allocative efficiency, but certain institutional features may also trigger inefficient migration. As a job in a high-income country entails generous welfare and social insurance entitlements, migrants’ reservation wages may lie below their opportunity cost of labor. We show that this gives rise to an externality when employers and migrant workers can pass some of their remuneration costs onto taxpayers. Once welfare benefit entitlement is secured, the reservation wage of the migrant rises, giving the firm an incentive to replace the worker with a similar migrant willing to accept lower pay. This leads to excess churn—a reallocation of labor within firms that simultaneously involves a flow of employees to unemployment benefits and the hiring of similar workers. Based on Norwegian data, we present evidence of high excess churn rates in firms with many workers from the new EU member states.

Climate-Smart Agriculture in the Northeast of Brazil: An Integrated Assessment of the Aquaponics Technology

The purpose of this study is to determine if aquaponic systems can reduce food insecurity in the semi-arid regions of Brazil and generate income for the beneficiaries. Aquaponics is a potentially sustainable way to produce food based on gardening, hydroponics and aquaculture. A case study, based on a project called Aquaponova, was developed. The aquaponic systems currently used in the project are non-commercial and designed for households with limited resources. The data based on six existing systems within this project were used to compare the costs and the benefits. The cost–benefit analysis covers four scenarios and three financing options. The results show that aquaponic systems have a large potential and can reduce food insecurity in semi-arid regions while generating income for the beneficiaries. Even if the system only produces 40% of the total estimated production, the system will still be feasible. However, the low opportunity cost of labour is an essential factor for obtaining these positive results. Moreover, the social benefits, such as a community spirit and the health benefits of the system, should not be underestimated.

Revisiting the land use assumptions in forest carbon projects through a case from India

Forest carbon projects are based on the premise of stable land use over long durations generally ranging from 20 to 100 years. This narrative is based on two assumptions- first, that project will be able to offset the opportunity cost of land and labour through carbon and other benefits and second assumption being that social, economic, political and biophysical factors will remain largely stable and not affect the land use significantly. This research critically evaluates these assumptions with the help of empirical evidence from a project in Haryana in India. The analysis suggests that various socioeconomic factors such as the development context of the region, changes in crop, wage and carbon prices have increased the opportunity cost of land manifold. Similarly, factors such as increased uncertainty over resource rights and biophysical factors have adversely affected the land use choices and project viability. Around 50% of the participants have changed the land use affecting the project viability. The opportunity cost of participation has been unevenly high for marginal and poor participants, who are worst affected. Hence, it can be argued that these universal land use assumptions of forest carbon projects are questionable.These findings have implications for the role and design of forest carbon projects in the broad context of climate mitigation. The land use change and forestry options through market based forest carbon projects might not offer as big a mitigation opportunity as is generally projected in the literature due to changing opportunity costs of land, complex property rights and other factors. Hence it might require recalibration of the role of these projects in the mitigation strategies at local,national and global levels. Similarly, the forest carbon projects need to be designed based on a comprehensive assessment of land use, which considers not only a dynamic and differential opportunity cost across various stakeholders, but also other sociocultural and political factors, which can impact the land use and sustainability of the project.

Allocating Subsidies for Private Investments to Maximize Jobs Impacts

Governments often aim to influence the amount and sectoral allocation of private investments through explicit or implicit subsidies. The rules used to select projects to benefit from subsidies may vary, depending on the policy objective. This paper develops a general framework to allocate subsidies to private investments in the presence of jobs-linked externalities (JLEs). JLEs emerge when wages exceed the opportunity cost of labor (labor externalities), or when there are social gains from creating better jobs for some classes of worker, such as women or youth (social externalities). Like all externalities, JLEs create a gap between private and social rates of return. Investments can be socially profitable (once the corresponding JLEs are internalized) but the private returns may be too low for the firm to go ahead. JLEs help to explain why many developing countries see insufficient investment in projects that would reallocate labor towards better jobs. The concept of JLEs is well established in economic literature, but there is a need for better operational approaches to address them. Like other externalities, JLEs can be corrected using a variety of possible subsidies (such as: grants, subsidized infrastructure, credit, training, technical assistance and tax exemptions). But doing this efficiently and at scale this requires mechanisms to (a) estimate the value of the externality and (b) discover the amount of subsidy needed to trigger the private investment. This paper shows that the optimal way to allocate subsidies to offset JLEs is through a competitive bidding process which selects projects based on the estimated amount of JLEs per dollar of subsidy. The bidding process provides an incentive to investors to reveal the subsidy needed for a project to become privately viable. We show that the proposed approach maximizes the jobs impacts of a given amount of fiscal resources that has been allotted to support better jobs outcomes

Introducing labour productivity analysis in a co-innovation process to improve sustainability in mixed family farming

Mixed family farms produce almost half of the world food. Increasing food supply in developing countries requires increasing productivity of both land and farmers’ labour as key to increase household income, food security and reduce poverty. A research project developed into Uruguayan vegetable family farms (2006–2010) revealed that the main life quality problems were low family income, high work overload, lack of leisure time, and health problems associated with work. In many of these farms, labour productivity was lower than the opportunity cost of labour. Understanding labour productivity determinants would help to guide co-innovation processes of family farm systems. The objective of this study was to develop and apply a method to analyze labour productivity (LP) at farm level, identifying the main causes of low LP, to use its results in a co-innovation process. We selected 14 vegetable-beef cattle farms with different resource endowment. The method developed involved characterization and quantification of labour allocation to farm activities, calculation of technical coefficients that explained LP and quantification of improvement scenarios. The first scenario estimated the impact of farm redesign plans and the second one added the effect of mechanizing some tasks. LP was lower than the opportunity cost of labour (4 USD h−1) in 10 out of 14 farms. LP in vegetable production (LPv) was explained by both, net return (NR, $ kg−1) and labour efficiency (LE, kg h−1). LE correlated with the amount of product sold (APS, kg of vegetables or meet per year). LP in beef cattle production (LPb) was lower than LPv. LPb was higher on farms with more than 80 cattle units (CU) and 60ha due to lower labour per ha and per CU showing a scale effect. Projected scenarios showed that LP could be tripled by improving resource allocation, and crop and animals management. Mechanizing some labour consuming tasks could further increase LP by 12 %. This study contributes to co-innovation methodology development by adding labour productivity analysis at diagnosis stage and using the results to aid participatory development of applicable and appropriate strategies to increase family farm systems sustainability.

Spatiotemporal variations in cropland abandonment in the Guizhou–Guangxi karst mountain area, China

Abstract Since 2000, vast areas of cropland in the rural mountain areas of China have been abandoned for reasons including labor loss and rapid urbanization, although the spatiotemporal patterns and causes of abandoned cropland (ACL) are not fully understood. We investigated changes in cropland abandonment in the Guizhou–Guangxi karst mountain area (GGKMA). We used the Moderate Resolution Imaging Spectroradiometer normalized difference vegetation index in conjunction with phenology metrics to obtain the land-use trajectory from 2001 to 2015, and then mapped the extent of cropland abandonment based on this land-use trajectory and local crop rotation cycle. We found that 10.45% (2.24 × 104 km2) of cropland in the GGKMA has been abandoned since 2001. In three sub-periods (2001–2005, 2005–2010, and 2011–2015), the overall trend showed an initial increase and then a slight decrease in the cropland abandonment rate (CAR) of 11.55%, 19.29%, and 17.17%, respectively. We explored the effects of environmental and socioeconomic factors on differences in the CAR by applying a multi-level model approach. About 26% and 16% of the variances in CAR were explained at the county and small watershed levels. At the small watershed level, spatiotemporal changes in CAR were primarily influenced by farming and soil conditions, while the severity of soil hydraulic erosion was a key factor in determining the distribution of CAR. Rural depopulation, the decline of agricultural activity, and low levels of education had significant positive effects on the increasing CAR, while the “feminization” of agriculture had the opposite effect on CAR at the county level. The results of this study implied that the spatial variation of abandonment may be influenced by environmental constraints, while socio-economic changes were the direct cause of the temporal trend of abandonment. Government should encourage farmers to increase the vegetation cover rather than continually undertake unsustainable agricultural activities in the areas with steep slopes and eroded soil, as well as strive to reduce the production costs associated with scattered plots, poor agricultural infrastructure, and the rising opportunity cost of labor. This could include conducting land consolidation and transfer, and providing agricultural subsidies.

Evaluation of effectiveness of Mass Vaccination Campaign against Peste des petits ruminants in Chhattisgarh state, India.

The study evaluated the effectiveness of 'Mass Vaccination Campaign (MVC)' implemented against the contagious transboundary OIE notified Peste des petits ruminants (PPR) in sheep and goats on the lines of 'pulse polio campaign' for humans in Chhattisgarh state, India. The effectiveness was evaluated on the axes of adequacy, financial viability under with and without MVC through differencing under various scenarios and options and programme impact from a farmer's perspective. The adequacy evaluation revealed that the reported outbreaks, diagnosed and death cases declined under PPR-MVC inconsonance with increased vaccination coverage. Furthermore, the seroconversion increased during post PPR-MVC implies elevated immunity levels in the sheep and goat population. The estimated mean mortality loss was USD 45.2 and USD 16.5 per animal in goats and sheep, respectively, whereas the treatment and opportunity cost of labour was USD 1.9 and USD 2.5 per animal respectively. Under the low PPR incidence scenario, benefit: cost ratio, net present value and internal rate of return were 4.9:1, 48.9 million USD and 146.6%, whereas it was 12.4:1,142.7 million USD and 430.4% and 13.5:1,156.7 million USD and 430.4% under medium and high incidence scenarios. Furthermore, the option of vaccinating 100% risk population during the first year followed by 30% during subsequent years to cover naïve population will maximize benefits than 100% coverage every year; nevertheless, benefits outweighs cost manifolds in both of these options. The farmers had a positive opinion on the overall services provided under PPR-MVC and the results provide the empirical evidence on effectiveness of 'mass vaccination' for its replication in other states of India or countries with similar socio-economic and rearing environments.

Implications of regional economic conditions on the distribution of technical efficiency: Examples from coastal trawl vessels in Vietnam

Vietnam's marine capture fisheries are open-access, and the increasing number of fishing boats has led to concerns about the sustainability of the industry. Information on the level of efficiency and its determinants can help inform appropriate regulations and policies that support sustainable fisheries. However, such management must also be sympathetic to the regional economic environment in which the fishers operate. In this paper, the level of technical efficiency and its determinants for trawl fishing vessels in Vietnam is estimated using stochastic frontier analysis. The empirical results suggest that the average technical efficiency of the surveyed fishermen is about 79%, suggesting potential room to improve performance. Several factors have been identified which affect technical efficiency, including the age of the vessel, skipper experience and age, distance from fishing ground, engine type and use of family members in the crew. Significant differences were also seen between regions, with technical efficiency seemingly affected by the opportunity cost of labour. Poorer regions with fewer alternative employment opportunities were also associated with lower average technical efficiency, reflecting the effects of greater capital and labour non-malleability in these areas.

Explaining virtual water trade: A spatial-temporal analysis of the comparative advantage of land, labor and water in China

The well-known “virtual water hypothesis” states that water-deficient regions/countries could alleviate water stress through importing water-intensive products from water-abundant regions/countries. Although observed trading patterns do often not support this hypothesis, there is a lack of research to explore the reasons why trade patterns often do not support the intuitive virtual water hypothesis. To fill this important gap, we introduce comparative advantage theory in a quantitative way to track the driving forces of net virtual water export based on the spatial-temporal distribution of resource productivity and opportunity costs of land, labor and water use in agricultural and non-agricultural sectors across Chinese provinces between 1995 and 2015. The results show that regional differences in land productivity between agricultural and non-agricultural sectors are the main forces determining the pattern of virtual water flows across major regions, and other resources such as labor and water have played only a limited role. Our study shows that the current market forces reflect the scarcity of land resources, but does not reflect the water scarcity in the context of interregional trade in China. Our findings suggest that the ongoing efforts to increase land productivity of agriculture in the southern regions would contribute to reducing water scarcity in the North and Northeast China Plain.

Commercial Farms in Polish Metropolitan Areas: Changes in Production Factors

Both the literature and economic practice increasingly note differences in adaptation processes taking place in farms operating in the immediate proximity of large cities and other commercial farms. In areas where urbanisation and metropolisation processes are ongoing, agriculture not only faces a number of obstacles, but also many opportunities, and as a result processes of structural change are very rapid here. The identification of tendencies to changes in resources of farm production factors may constitute a basis for developing very useful research in Poland aimed at the introduction of appropriate development strategies for urban and peri-urban agriculture. The aim of this paper is to present directions of changes in production factors of commercial farms operating in six selected Polish metropolitan areas (MA). Detailed analyses covered 189 farms in six Polish metropolitan areas. The farms researched from 2004 to 2016 provided continuous data to the Farm Accountancy Data Network (FADN). The comparative material used in the analyses covered 1665 farms outside of metropolitan areas. The analyses of commercial farms’ production capacity have shown that farms in MA inner zones (in immediate proximity of the city core) in 2004 possessed larger average resources of land, labour and capital. Between 2004 and 2016, production capacities of farms in the inner and outer zones of the MA evened out to a large extent. However, their average potential was still bigger compared to farms outside of metropolitan areas. Observation of ongoing changes has confirmed that the biggest percentage of farms reducing land, labour and capital resources was in the inner zone, which confirms the existence of barriers to their further development, i.e. limited supply of land and high opportunity cost of labour, among other things. It seems that these farms have to look for alternative development paths, namely they should focus on diversification and the development of non-agricultural services.

ECONOMIC AND SOCIAL LINKAGES BETWEEN MALARIA ILLNESS AND CROP PRODUCTION IN YOBE STATE, NIGERIA

The purpose of this article is to stimulate discussion about the links between malaria pandemic and crop production, and to broaden our understanding of the effect of malaria in terms of its economic burden on households and national economic development of endemic economies. It begins with a theoretical framework, emphasizing economic development imperative of malaria, and the implication for agricultural development. Using propensity score matching, the likelihood of malaria infection was evaluated in relation to key socioeconomic variables among infected and uninfected households in agricultural communities of Yobe State. Similarly, the linear regression provides empirical evidence to suggest that the instrumented malaria indices significantly reduce crop production among malaria infected households. The economic loss approach further stresses the economic imperative of the opportunity cost of labor among malaria infected households. The empirical results suggest targeting farmers with malaria-specific control and prevention programs in the State.

Adoption Constraints for Small-scale Agroforestry-based Biofuel Systems in India

Small-scale agroforestry-based biofuel production has recently been proposed as a strategy for rural poverty alleviation, but few empirical evidence is available on farmer adoption of such novel systems. This study describes adoption of oilseed tree mixtures on smallholdings in Hassan district, South India, and examines the impact of a biofuel extension program and farmer characteristics on adoption. Cross-sectional survey data and regression analyses addressing various forms of selection bias, are used. The findings reveal that tree cultivation is much more prevalent than oilseed collection, and that various activities of the biofuel extension program only stimulate the former. Low seed prices and high opportunity costs of labour are major factors impeding households to collect seeds from planted or wild oilseed species. The paper concludes that the program succeeds as an agroforestry program but not as a biofuel program. Similar challenges pertain to small-scale agroforestry systems as to jatropha-based plantation systems, although the former are a Low-Risk High-Diversity approach to build feedstock for the future.

The potential of small ruminant farming as a means of poverty alleviation in rural southern India.

Small ruminant production has the potential to address the global challenge of greatly increased food production in impoverished rural areas in a manner that is socioeconomically sustainable and carbon efficient. Twenty-six small ruminant landless farmers in three villages in the Kanchipuram District of the state of Tamil Nadu were surveyed with regard to their sheep farming practice and production indices, with the preliminary aim of evaluating the potential of small ruminant farming in alleviating poverty in parts of rural in southern India. The small ruminant farmers reared mostly indigenous Madras Red sheep as a means of generating primary or supplementary income. Participatory interviews were undertaken to enable the completion of a questionnaire pertaining to sheep production over the four most recent annual production cycles (referred to as instances) at the time of the study. When calculating the annual farm profits without taking into consideration the opportunity cost of labour, 83% of annual sheep production cycles over a 4-year period added to household incomes. Further, 23% of the instances that accounted for the opportunity cost of labour, household income was raised above the Indian Government's defined poverty line solely through small ruminant farming. Management practices were identified, while participating in landless farmer interviews provided an insight into the husbandry, or lack thereof, which resulted in low lambing percentages and rates of high ewe losses, perinatal lamb mortality and abortion. The study showed both the vulnerability and potential resilience of small ruminant farming to natural disaster, in this case catastrophic flooding in 2015. While small ruminant farming generated income in most instances, the way it is practiced creates opportunities for simple changes in husbandry and management that could make it more efficient in poverty alleviation.

Sex differences in political leadership in an egalitarian society.

We test the contribution of sex differences in physical formidability, education, and cooperation to the acquisition of political leadership in a small-scale society. Among forager-farmers from the Bolivian Amazon, we find that men are more likely to exercise different forms of political leadership, including verbal influence during community meetings, coordination of community projects, and dispute resolution. We show that these differences in leadership are not due to gender per se but are associated with men's greater number of cooperation partners, greater access to schooling, and greater body size and physical strength. Men's advantage in cooperation partner number is tied to their participation in larger groups and to the opportunity costs of women's intrahousehold labor. We argue these results highlight the mutual influence of sexual selection and the sexual division of labor in shaping how women and men acquire leadership.

Redesigning oilseed tree biofuel systems in India

Liquid biofuel production has been widely promoted as a rural development strategy in the South. Yet, the development of biofuel value chains faces many context-specific challenges. In this empirical study we use a labelled choice experiment to assess smallholder farmer preferences for alternative production systems, value chain organisations and market developments for a biofuel program using oilseed trees (neem (Azadirachta indica), pongamia (Millettia pinnata), mahua (Madhuca longifolia)) in Karnataka state, India. Our results demonstrate that biofuel programs can benefit from ex ante analyses to improve their design. We find that most farmers (71%) are likely to adopt biofuel trees in most scenarios, especially species with relatively high yields, low labour requirements and high oilseed prices. Nevertheless, value chain reorganization through contracting and labour provision proves to be the key lever to stimulate adoption. This calls for further research on effective contract design and implementation, and for developing alternative business models. Our results imply that next to high opportunity costs of land, also high opportunity costs of labour can be a barrier to biofuel tree adoption. If biofuel programs are to succeed, they have to move beyond the idea of smallholder biofuel production on marginal lands with surplus labour.

Assessing the impacts of land fragmentation and plot size on yields and costs: A translog production model and cost function approach

More attentions should be focused on the changes in plot size of each household rather than the size of farmland in the discussions of economic problem of land fragmentation in China. This study empirically analyzes the impact of land fragmentation and plot size on yields, along with average costs, using household survey data collected from the Jiangsu province in China. A detailed and careful translog production model and cost function are employed to understand and analyze these problems. The empirical results reveal that there are increasing returns to scale in agricultural production. Land fragmentation reduces yields through changes in marginal outputs of agricultural inputs. Especially in areas with high opportunity costs of labor, the negative impact is more obvious. A one-unit increase in the Simpson index leads to a 39% increase in the average cost, whereas a one-unit increase in plot size leads to an 8% decline in the average cost. Thus, moderate expansion of the size of the plot can reduce the average cost, implying that agriculture can achieve economies of scale within each plot. Economies of scale should be developed by keeping farm size constant, reducing the number of plots, and expanding the size of each plot. We suggest that economies of scale can be achieved in each plot by either land consolidation or land transfer as well as by joint farming and joint association.

How do herders do well? Profitability potential of livestock grazing in Inner Mongolia, China, across ecosystem types

Livestock production has increased in Inner Mongolia, China, despite widespread documentation of grassland degradation. To begin investigating the relationship that produces these trends, we studied farm-level decisions of herder households. We estimated economic enterprise budgets for 15 counties in Inner Mongolia across five ecosystems in 2009 and 2014 by using household survey data. Six counties decreased livestock stocking rates and had improved profit over time. The remaining counties increased their stocking rates over the period studied and profit decreased for all but one county. Livestock operators who reported negative profit over the 5 years were located across ecosystem types and reported a large number of weather shocks that affected grassland availability. Removing the opportunity cost of land and labour from the economic enterprise budgets resulted in a positive profit for all counties, which may explain why herders continue to increase stocking rates with decreased grassland availability over time.