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Perpetuation of subsistence farming in Western Balkans: the role of factor market imperfections

Latruffe, Laure, Davidova, Sophia M., Desjeux, Y. Perpetuation of subsistence farming in Western Balkans: the role of factor market imperfections. In: 82 Annual Conference of the UK Agricultural Economics Society, 31 March - 2 April 2008, The Royal Agricultural College, Cirencester, UK. (Unpublished) (KAR id:14670)


The paper analyses the imperfections in output and factor markets in Kosovo that act as a barrier to farm commercialisation. On the one hand, agricultural households may not have access to output market due to an underdeveloped downstream sector. On the other, local producers might not be preferred to importers as their production level is small with a variable quality due to constraints in factor markets.

Data from the Agricultural Household Survey 2005 are used. A conceptual framework is developed on the basis of a household model where non-separability results from a “wedge” between purchase and sale prices due to transaction costs. The share of the output sold in the total value of output is regressed over a set of explanatory variables. A truncated regression is employed due to the high percentage of the dependent variable having the value of zero. Many of the observations do not contain all three factor prices - land rent, wages and interest. For this reason three separate regressions are run, each containing one of the prices.

The model including wages is non-separable. Households with more members sell less as they have preferences for household needs. This calls for active rural development and educational policy which can create labour opportunities for agricultural households.

Item Type: Conference or workshop item (Paper)
Uncontrolled keywords: subsistence farming, agricultural households, separability, market imperfections, Kosovo
Subjects: S Agriculture > S Agriculture (General)
H Social Sciences > HB Economic Theory
Divisions: Divisions > Division of Human and Social Sciences > School of Economics
Depositing User: Sophia Davidova
Date Deposited: 29 Jun 2011 19:02 UTC
Last Modified: 16 Feb 2021 12:26 UTC
Resource URI: (The current URI for this page, for reference purposes)

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