A new U.S. farm household typology: Implications for agricultural subsidies
The objective of this dissertation is to motivate, develop, and apply a new typology of U.S. farm households. Household economic theory serves as the foundation for this typology. Using the 2003 Agricultural Resource Management Survey, cluster analysis identifies six mutually exclusive groups of U.S. farm households. ^ The six mutually exclusive groups are: Single Income Ruralpolitan, Double Income Ruralpolitan, Active Seniors, Farm Operator with Spouse Working Off Farm, Traditional Farms, and Commercial Farms. Single and Double Income Ruralpolitan operators primarily work off the farm. Spouses also work off the farm for Double Income Ruralpolitans. Operators in the Active Seniors group are the oldest among all groups and they still work on the farm. The next group, Farm Operator with Spouse Working Off Farm, has the operator working on the farm and spouse working off the farm. Both operator and spouse work on the farm for Traditional Farms. Commercial Farms has the largest value of farm assets with the operator working on the farm. These six groups comprise the U.S. Farm Household Typology. ^ Descriptive statistics, pairwise t-tests, a stability index, and a discriminant function show that the U.S. Farm Household Typology is unique and identifiable. It is the contention of this dissertation that the U.S. Farm Household Typology allows for a richer discussion of U.S. farm policy. In particular, the impacts of government program payments on the farm labor and savings decisions of U.S. farm households. ^ Regression results show that decoupled government payments increase farm labor in a U.S. farm household, the largest increase being in Ruralpolitan farm households. It is also found that the U.S. Farm Household Typology better explains the farm labor decision relative to the more common Economic Research Service (ERS) Farm Typology. ^ The saving regression results show that agricultural subsidies do not impact the savings decision; however, the results show that farm households who allocate more resources to the farm have an increase in total savings. This result supports the strong precautionary saving motives of farm households given the uncertainty of farm income. Finally, the savings decision is better explained by the U.S. Farm Household Typology relative to the ERS Farm Typology. ^
Allan Gray, Purdue University.