Does Farm Size Really Converge The Role of Unobserved Farm Efficiency Report as inadecuate

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We analyze the growth of family farms in Israeli cooperative villages between 1981and 1995, using longitudinal data. We use instrumental variables to account for theendogeneity of initial farm size, and correct for selectivity due to farm survival. Wealso include a technical efficiency index, derived from the estimation of a stochasticfrontier production model, as an explanatory variable. We find that technicalefficiency is an important determinant of farm growth, and that not controlling fortechnical efficiency could seriously bias the results. The size distribution of Israelifamily farms is found to be mostly diverging, while without technical efficiency farmgrowth seemed to be predominantly random.

Keywords: farm size ; farm growth ; farm survival ; instrumental variables ; sample selection ; technical efficiency

Subject(s): Farm Management

Productivity Analysis

Issue Date: 2008-12

Publication Type: Working or Discussion Paper

PURL Identifier:

JEL Codes: Q12; L25; C34

Series Statement: Discussion Paper


Record appears in: Hebrew University of Jerusalem > Department of Agricultural Economics and Management > Discussion Papers

Author: Dolev, Yuval ; Kimhi, Ayal



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