Technology adoption, risk, and intrafamily time allocation: An application of the agricultural household model

The primary objective of this study is to develop an agricultural household model that provides a methodological means to empirically examine how the relative variability of the high-yielding variety (HYV) rice influences the agricultural household consumption, production, and labor supply decisions in a multiple production environment. A nonseparable agricultural household model using the indirect utility approach is constructed. Nonseparability occurs due to production risk and self-selectivity bias in the labor supply decisions. Corner solution problems arise from censored observations in crop production and are complicated by interdependent adoption decision.; Two data sets are used in empirical estimations. First, the determinants of HYV adoption and adoption intensity are analyzed using the probit, Tobit, and Cragg's models. This analysis is based upon the Six District Study Area data from West Bengal, India, and provides an overview of adoption behaviors in a large geographical area. It is found that the influence of the probability of adopting the HYV rice (results of probit) is significantly different from the influence of the intensity of adoption (results of Tobit). Education and irrigation significantly increase the probability, as well as the intensity, of HYV adoption.; Another survey data collected for the Medinipur District in West Bengal, 1990-91, is used to estimate the agricultural household model and the importance of self-selectivity in adoption decision and production risk in household decisions. The results support the nonseparability assumption that the household consumption and production decisions should be determined simultaneously. The bivariate probit results indicate that the adoption decision of HYV rice and the traditional varieties (TV) is independently determined. As expected, a higher ratio of HYV to TV price variances reduces HYV output supply but increases TV output. The selectivity variables show significantly impacts of family labor demand for both adult males and females. The adult female labor supply is more elastic than the elasticity of adult male labor supply. In addition, both male and female labor supply elasticities are reasonable compared with previous studies.