This paper examines the efficiency at labor allocation and the productivity of labor by gender between and within farm and non-farm enterprises on Thai farms. A Cobb-Douglas production function is estimated for both types of enterprises using disaggregated data. The estimated parameters of these functions are utilized to analyze efficiency and productivity issues. The results showed that inter-enterprise efficiency can be enhanced by allocating more labor of men to non-farm enterprises and mare labor of women to farm enterprises, but cultural constraints may impede such substitution. Policy makers need to improve incentives for non-farm enterprises

Meyer, Richard L.

Pollard, Stephen K.

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Laoor Allocation and Productivity ot Men and Women on Thai Farms ~tephen K. Pollard Richard L. Meyer August 19R5 ~conoml< s anrl ~or!nloRY Occasional Paper No. I lYY The Ohio State University Agricultural FinancP Program 2120 Fyffe Road, Columbus, Ohio 41210 Paper presented at thP XI~ International Conterence ot Agricultural Economists MRlaga, Spain, August 26 - September 4, 198~ Labor Allocation and Productivity of Men and ~om~n on Thai Farms AbstrR~t This paper examines the efticienry ot labor allocation and the productivity of labor by gender between and within farm and non-farm enterprises on Thai farms. A Cobb-Douglas production function is estimated for both types of enterprises using disaggregated data. The estimated parameters of these functions are utilized to analyze effi-ciency and productivity issues. The results showed that inter-enterprise efficiency can be enhanced by allocating more labor of men to non-farm enterprises and more labor of women to farm enterprises, but cultural constraints may impede such substitution. Policy makers need to improve incentives for non-farm enterprises. LABOR ALLOCATION AND PRODUCT! VI TY OF M.EN AND WOMEN ON THAI FARMS INTRODUCTION Rural development analysts and decisionmakers have placed increased emphasis on expanding rural non-farm employment in recent years. One area of concern has focused on rural industrialization and small-scale enterprises (Anderson and Lieserson; World Bank). Another has focused on the allocation of labor in farm households, including work on non-farm enterprises (Evenson; Onchan and Chalamwong). Numerous programs have been designed to enhance rural incomes through both farm and non-farm employment, but the allocative efficiency impacts of such programs have been largely ignored (Chalamwong, et.al.). This paper reports on an analysis of resource use for a sample of Thai farms. The sample is particularly well suited for this study because detailed data were carefully collected on both farm and non-farm enterprises in the household.The purpose of the analysis is to analyze: 1) the efficiency of labor allocation by gender between and within farm and non-farm enterprises; and 2) the productivity of labor by gender in these enterprises. These issues are analyzed by estimation of a Cobb-Douglas production function and derivation of marginal productivity and efficiency criteria. The efficiency criteria utilized assumes that farm-households allocate resources consistent with the opportunity cost of these resources, and allow for a test of the hypothesis that farm-households allocate resources in different activities so that the opportunity cost of each resource is equalized across activities. The framework used in this study also allows for an analysis of how market incentives can influence labor productivity of farm-households. Recent contributions to the economic development literature have stressed that improving such market incentives can lead to increased productivity of input use in the agricultural sector (Schultz). The relationship between incentives and women's productivity has received little attention in the literature on women's role in development (Cloud and Overholt). ANALYTICAL FRAMEWORK Consider a farm-household producing two outputs: an agricultural good (i.e. rice) and a non-agricultural good (i.e. bamboo baskets). The production function for each good is assumed to be the Cobb-Douglas form: N (1) lnYi • lnAi + E bi.lnXij j•l J where i•l for the farm good; i•2 for the non-farm good; lnYi is the natural log of the value of output of the respective good; bij is the output elasticity of the jth input used in the ith enterprise; lnXij is the natural log of the jth input used in the ith enterprise. Profit maximization and economic rationality requires that farm-households allocate resources among competing activities so that the opportunity cost of each resource is equalized across activities. The opportunity cost of each input used in production is given by the value - 2 -of its marginal product (MVP) (Ferguson): yi MVP iJ. • bi. X .1 ij ( 2) Efficient allocation of resources requires: ( 3) • 0 If the difference in eq. (3) is positive, then farm households use too much of the jth input in farm production vis-a-vis non-farm pro-duction. If eq. (3) is negative, then too much of the jth input is used in non-farm production. Resource misallocations that occur can then be explained by either the lack of economic rationality or due to the incentives and/or constraints that farm-households face (i.e. distorted product and input prices). Disincentives are reflected directly through the MVP of the input and reduce the opportunity cost and value of using an input i.n a particular enterprise. STATISTICAL METHODOLOGY AND RESULTS The Cobb-Douglas production function presented in eq. (1) is estimated by ordinary least squares separately for non-farm and farm enterprises, respectively, due to the availability of input use data by enterprise type. This approach overcomes drawbacks and/or alternative methods utilized in recent studies of multiproduct firms and farms (for example: Just, et.al.; Shumway, et.al.), such as lack of disaggr~gation of inputs used in different products and not considering the allocation of inputs that are constrained to the farm-household to different enterprises. These problems can lead to biases in the results and/or imposition of restrictions that may not be substantiated empirically. The specification of eq. (1) differs between farm and non-farm enterprises in terms of the inputs utilized. A six input production function is specified for farm production, while a four input production function is specified for non-farm production. The inputs used are: Xil the total number of hours of family male labor used in the ith enter-prise; Xi2 the total number of hours of family female labor used in the ith enterprise; Xi3• the amount of hours of hired labor used in the ith enterprise; Xf4• the intermediate input expense (in baht)!/ incurred in the ith enterprise; Xl5• the value of capital services (in baht) used in farming; Xl6• the amount of land cropped (in rai)~l; Yi is the total value of production of the ith Pnterprise. This study departs from previous work that weighted female labor contributions by a factor of .75 to .8 with respect to a male's labor contribution. A weighting scheme assumes that a woman's labor productivity is low~r than a man's, but such differences have been challenged by recent empirical work (Cloud and Overholt). The reasons why women's productivity is low is explained away by such a weighting scheme before it can be analyzed. Measures of capital services and land utilized in non-farm enterprises were not available a1though the magnitudes of each are small compared to farm enterpri Res. The data wPre part of an Pxceptinnally rich data set rnll•ct~d frnm 424 farm-households in 2~ villages in the Thai provinces ot Chiang MRi, Khonkaen, Roi Et, and Suphan Buri during the 1980/~1 crop year.~/ A total of 250 farm-ho11seholrls met the data requirements for the farm - 3 -production function estimation, and 91 satisfied the data requirements necessary for estimation of the non-farm enterprise production function. The results of the estimated Cobb-Douglas production functions are pr~sented in Table l for both farm and non-farm enterprises.~/ The estimates of the parameters hij are the estimates of the output elas-ticiti~s of th~ disaggregated inputs. The estimated parameters for the farm production function are all significant at the 5 percent level and are of reasonable magnitude. For the non-farm production function, all coefficients, except the estimated output elasticity for hired labor, are significant at the 5 percent level. The estimated marginal value products (calculated by eq. (2)) for each input by enterprise type are presented in Table 2. An analysis of intrafarm enterprise efficiency reveals that hired labor and intermediate inputs are underutilized, and capital services and land are overutilized when the value of the marginal product is compared to the opportunity cost of using these inputs (which is the relevant market input price). Both male and female labor are overutilized on farm enterprises given the market wage rate for farm labor. However, the opportunity cost of using another hour of woman's labor time is twice as much as using another hour of a man's labor time in farming. Examination of intra non-farm enterprise efficiency reveals that intermediate inputs are overutilized (again comparing the marginal value product and market cost of these inputs), while male labor time is underallocated and female labor time is overallocated based on the market wage rate. The insignificance of the variable for hired labor implies that farm-households will not hire labor for non-farm production. Applying eq. (3) reveals that allocation of both male and female labor time is overutilized in farm production (the difference calculated in eq. (3) is positive), vis-a-vis non-farm production. This misalloca-tion is more serious in the allocation of male labor time than female labor time. This finding appears to contradict the main assumption incorporated in the framework of the new household economics models: economic agents allocate resources (including time and labor) so that the opportunity cost of each resource in any activity is equalized (Evenson, Sumner). These results can be interpreted in relation to what is generally known about labor allocation patterns in Thai farm-households. The overutilization of resources in farming has been explained in other studies by the risk aversion behavior of farmers. The rice crop is the most important farm enterprise on most farms, both in terms of proportion of total crop area and source of food for family consumption. Therefore, it is argued that households first devote resources to assure family rice subsistence, then to other enterprises to generate cash income. Second, women tend to allocate relatively more time to non-farm enterprises than men. Banno confirmed this result for this entire sample. Traditions as well as logic influence this pattern. Men traditionally perform some farm tasks such as plowing and harvesting, while women transplant rice. On the other hand, women tend to stay closer to the house in order to care for children, garden plots, and animals and to prepare food. They work on non-farm enterprises during periods when there is less labor demand for these tasks. Men also work on some non-farm enterprises, such as blacksmithing and wood carving, which earn a good return but for which some specialized skills are requjred and product demand is limited and seasonal. They will not. - 4 -Table 1. Estimates of the Cobb-Douglas Production Functjon tor Farm and Non-Farm Enterpris~s Param~ter (Variabl~l -~- -------- - ----Constant bil (male labor) b12 (female labor) bi3 (hired labor) b14 (intermediat~ inputs) b15 (capital services) b16 (land) F Number of Observations -~nt~!.£!is~_lx.E!_ __ Farm Non-Farm 6.0304 (.3713)~/ .1143 ( .0430) .1839 ( . 0534) .0720 (.0235) .1225 (. 0341) .0502 (.0279) .1996 ( .0456) .4694 35.8223 250 -2.1696 ( l • 0'38 6) . 5572 (. 1099) . 5668 ( .1471) .0599 ( .0952) • 3887 (.1217) • 5769 29.3202 91 !7 Standard error~ i; parentheses. Table 2. Estimated Marginal Value Products for Inputs in Farm and Non-Farm Enterprises and Market Input Prices -- -- ---------Input Male Labor Female Labor Hired Labor Intermediate Inputs Capital Services Land MVPFarm8 1 ·---- ---- ----1.1013(baht/hr) 2.1213(baht/hr) 142.824 (baht/hr) 215.779 • 5232 191.992 <baht/rai) Market MVPNonfarm8 1 ____ I_n~p_u_t_P_r_i_c_e_b_/ 6.175(baht/hr) 3.056(baht/hr) n.s.S./ 4.65(baht/hr) 4.65(baht/hr) 4.6S(baht/hr) 1 baht~! 1 baht . 3870 n.a.!:!/ n.a.c!f 500-900(baht/rai) ~T-The MVP is calculated using eq. (2) at the point of geometrir means. ~I Taken from Chalamwong, et al., p. 11. r/ Not significant. rl/ Not availab)P. el l baht ot capital services or intermediate inputs shoulrl rPt\trn I bRht (assuming no int~rPst r~tP chRrgps). - s -however, gPnerdJ tv work on silk dnd cotton weav1ng and embroidery wh1~h provide much non-farm employment tor women. Both mPn dnd women take ott-tdrm 1obs. Frequent]v this work IR not availilbiP H tht> .<~vPrap,P wagP ratE> liHPd in this studv, or it is availRble just dt the tim<? ot pPclk ldbtH dem md on the tarm. In many C'asf's, men mtgratp seHsonallv to b1gger rities where they obtain employment in relatively h1gh paying construction 1obs. Someone must stav at home to protect the property, tend to children and livestock, and care tor gardens. This usuallv is the wife because of her lower income earning potential in thP labor torce (Blaug). IMPLICATIONS Thai farm households appear to allocate their labor resources rat1onally within the limits of cultural constraints, but not consistent with market opportunities. These findings suggest that labor allocative efficiency can be enhanced by substituting more labor time of men for women in non-farm enterprises, and more labor time of women for men in farm enterprises. Thai farmers also lag behind some other Asian farmers in the use of modern varieties, fertilizers and other modern inputs. This underut1lization ot intermediate inputs is confirmed for thes~ farms. The challenge for Thai decisionmakers, therefore, is to find ways to increase productivity of farm and non-farm rural enterprises, rather than simply increase low productivity employment. The productivity and income earning potential of women would be enhanced through improvement ot inc~ntives in non-tarm activities (particularly product prices) which will raise the product1vity and value of women's labor. The specific ways to do th:ls arf" still being explored. Mead discusses how subcontrac-ting with urhan firms C'ould contr1bute to improving the quality ot production, improving production technology and increasing demand. A challenge that must be faced is that many products of several non-farm enterprises, such as pottery and bamboo products, face sharp competition from substitutes produC'ed in the expanding manufacuturing sector. NOTES 1/ Approximately 20 baht • $U.S. 1.00 2/ 1 rai • 0.4 acres. ~/ See Mead and Meyer tor a description of sampling procedures and characteristics of the farm-households interviewed. ~I A translog production funct1on was fitted and estimated, but a test ot the null hypothesis--the C-D is the appropriate produ~tion function--could not be rejected for either enterprise type. BIBLIOGRAPHY Anderson, Dennis and Leise>rson, Mark W., "Rural Non-farm Employmt=>nt in Developing Countrie-R," ~£?_!!~mi£__Development and Cultural -~~~ngE>, Vol. 2R,, No. 2, January JQHO. B.mno, Ynsuo, "Farm HouRPhold Lahar Supply in Non- and Ott-FArm Work in Rural Thajland," Unpublished M.S. Thesis, Thammasat University, Bangkok, Thailand, 1982. Blaug, Mark, "An Economic Analysis of Personal Earnings in Thailand," ~~onomic Development_and Cultural Change, Vol. 23, No. 1, October 1974. Chalamwong, Yongyuth; Meyer, Richard; and Hushak, I,eroy, "Allocative Efficiency of Part-Time and Full-Time Farms: The Case of Thailand, 11 ESO No. 979, Department of Agricultural Economics, The Ohio State University. June, 1983. Cloud, Kathleen and Overholt, Catherine, "Women's Productivity in Agricultural Systems: An Overview," in Rural Development Growth and Inequity, Contributed Papers Read at The 18th International Con-ference of Agricultural Economists, Gower Publishing Co. Ltd., 1983. Evenson, Robert E., "Time Allocation in Rural Philippine Households," American Journal of Agricultural Economics, Vol. 60, No. 2, 1978. Ferguson, C.E., The ~~~classi~al Theory of Production and Distribution, Cambridge University Press, Cambridge, Mass., 1979. Just, Richard; Zilberman, David; and Hochman, Eithan, tlEstimation of Multicrop Production Functions," American Journal of Agricultural Economics, Vol. 65, No. 4, 1983. Mead, Donald C., "Subcontracting in Rural Areas of Thailand," M:l.chigan State University, East Lansing, International Development Working Paper No. 4, 1982. Mead, Donald C. and Meyer, Richard L., "Rural Off-farm Employment Surveys: Approaches and Methodology," Kasetsart University, Bangkok, Research Paper No. 3, May 1981. Onchan, T. and Chalamwong, Y., "Rural Off-Farm Employment and Income of Rural Households in Thailand: Some Research Findings," Center for Applied Economics Research, Kasetsart University, Bangkok, Research Paper No. 4, October 1981. Schultz, T.W. (editor), Distortion of Agricultural Incentives, Indiana University Press, 1978. Shumway, C.; Pope, Roulon; and Nash, Elizabeth, "Allocatable Fixed Inputs and Jointness in Agricultural Production: Implications for Economic Modeling," !>merican Journal of~icultural Economics, Vol. 66, No. 1, 1984. Sumner, Daniel A., "The Off-Farm Labor Supply of Farmers, American Journal of Agricultural Economics, Vol. 64, No. 3, Augu·;t--f982. World Bank, Thailand: Toward_a Development Strategy of Full Participation, World Bank Country Report, Washington, D.C., World Bank, 1980. 

Labor Allocation and Productivity of Men and Women on Thai Farms

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Labor Allocation and Productivity of Men and Women on Thai Farms

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