Human Capital, Entrepreneurship, and Farm Household Earnings

Duke Economics WP #97-03

33 Pages Posted: 25 Jun 1997

See all articles by Dennis Tao Yang

Dennis Tao Yang

Chinese University of Hong Kong - Department of Economics

Mark Yuying An

Federal National Mortgage Association (Fannie Mae); Duke University

Date Written: June 1997

Abstract

The allocation of resources between agriculture and non- agriculture is a central decision of a farm household. In this paper we formulate a profit-maximization model in which human capital enhances efficiency through both within-sector effects and across-sector allocation of quasi-fixed inputs. The model is estimated using Chinese household data that contain detailed activity information during a period of rapid growth in non-farm production. We find that schooling and experience improve the sectoral uses of household- supplied inputs, accounting for 49 percent of their total contribution to earnings. The evidence suggests that conventional estimates of human capital returns obtained within sectors would substantially undervalue the role of human capital in development.

JEL Classification: O15, J43, O12

Suggested Citation

Yang, Dennis Tao and An, Mark Yuying, Human Capital, Entrepreneurship, and Farm Household Earnings (June 1997). Duke Economics WP #97-03, Available at SSRN: https://ssrn.com/abstract=8594 or http://dx.doi.org/10.2139/ssrn.8594

Dennis Tao Yang

Chinese University of Hong Kong - Department of Economics ( email )

Shatin N.T.
Hong Kong
Hong Kong

Mark Yuying An (Contact Author)

Federal National Mortgage Association (Fannie Mae) ( email )

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