Transcript Diapositiva 1

A General Equilibrium Analysis at the
Economy and Household Level:
An Application to Italian Agriculture
Riccardo Magnani and Federico Perali
University of Verona
La Microsumlacion como instrumento de evaluacion
de las politicas publicas
Madrid, November 15-16 2004
1
Organization

The macro level



The “MEG” General Equilibrium Model at the
Economy Level (scenarios and results)
The Political Economy of the Results
The micro level

The Collective Farm-Household Model



Estimation technique
Econometric Results
The General Equilirium Representation of the
Estimated Farm-Household Model
2
The micro-macro link
AGE
n
N   hh
h 1
Nation
Collective
Model
h
Territorial
AGE
I
g
i 1
i
hCTN
Territory
Individuals
Household Farm
Model
Household =
community level I
CAGE
C 
C

i1
hi
hC
Community level II
h N
3
The macro Level
The “MEG” General Equilibrium Model
of the Italian Economy
with Emphasys on the
Agricultural Sector
4
The MEG Model
The ISMEA survey of the Socio-Economic
Characteristics of Italian Farm-households (1881 obs)
The Input-Output Table
(SAM) of Italian
Agriculture (integrated
with the rest of the
Italian economy)
“Non behavioral”
simulations
impacts on the
farm/household/environmental
budgets
The MEG ISMEA model
5
The 1996 ISMEA Socio Economic Survey
The ISMEA survey was designed on the
basis of a household collective model of
the farm-household aiming at anticipating
the real demand for information
necessary to estimate the econometric
model
6
Data Sources
Agricultural
Household
Italian Input-Output
Table
Farm Budgets
Household
Budgets
Income and
Wealth
Leisure
Rural and Urban
Households
ISMEA
ISTAT ’95, Household
Budgets
Banca d’Italia ’95, Income
Data
Eurisko ’95, Time Use
Data
7
The MEG Model
The Structure
The I-O Table
The SAM
41 sectors of which
11 household classes
• 23 agricultural
• 9 agro-industrial
• 7 other industries
• 2 services
• 7 farm-household types
• 1 rural class
• 3 urban classes (low-mediumhigh income)
(Households consume and offer
labor)
Rest of the World and Europe
The Government
8
The MEG Model
The Model Scheme
PRODUCTION
input/output table
41 sectors
(41x41)
ADDED VALUE
Labor used by 41
sectors
capital used by 41
sectors
independent labor
used by 23 sectors
land used by 23
sectors
Indirect taxation net
of transfers
DEMAND
Table of private
consumption
(41x11)
LEISURE
Time budget
(11x1)
PRIVATE CONSUMPTION
11 categories of
private consumption
Public expenditures
private investiments
and stocks variations
export
AVAILABLE INCOME
Dependent labor
income
Capital income
Indipendent labor
income
Returns from land
transfers
taxation
9
The MEG Model
The model scheme
SAM structure
FARM AND RURAL
HOUSEHOLDS
LIMITED
RESOURCES
RETIRED
RESIDENTIAL
PROFESSIONALS WITH
LABOR
REMUNERATION:
LOW
HIGH
LARGE
VERY
LARGE
RURAL
URBAN
HOUSEHOLDS
HIGH
INCOME
GOVERNMENT
MEDIUM
INCOME
LOW
INCOME
FIRMS
10
The MEG Model
Farm-Household Typologies
Limited Resources
Very small farm-households with very low gross
returns, farm assets and global income.
Retired
Farms with retired heads of households.
Residentials
Farms whose heads of households are prevalently
employed in non agricultural activities.
Small farm-households
Farms with gross returns less then the first quartile
of the distribution.
Medium Farm-households
Farms with gross returns between the first and
third quartile of the distribution.
Large Farm-households
Farms with gross returns greater then the third
quartile of the distribution.
Very Large Farm-households
Farms with gross returns greater then the third
quartile of the distribution (livestock and intensive
cultivations).
11
Leisure

The stylized time use survey is a peculiar aspect of the ISMEA
survey. Leisure information for the urban households come from the
Eurisko Survey
leisure=recreation+personal care+rest
Farm Typologies
Farm Households
1
Limited
Resources
0.513
2
3
Retiremnt Residential
0.543
0.463
RURAL
4
5
6
Small
Middle
Large
0.532
0.518
0.512
7
8
Very Large Rural
0.500
0.542
URBAN
9
10
high
Mid
income
income
0.723
0.669
11
low income
0.639
12
The MEG Model
The sectors
Agriculture
Soft wheat
1
tobacco
13
Durum wheat
2
Grapes
14
rice
3
Olives
15
Corn and other cereals
4
Fruit
16
Dried fodder
5
Floricolture
17
Irrigated forage
6
Milk
18
potatoes
7
Beef
19
tomatoes
8
Forestry
20
Other vegetables and legumes
9
Sheap and goats
21
Sugar beet
10
Other livestock
22
Soy bean
11
Fishery
23
Other industrial crops
12
13
The MEG Model
The sectors
Agro-Industry
Other industries
Meat
24
Gasoline
33
Milk and other dairy products
25
Electric energy
34
Water
35
Fertilizers
36
Pesticides
37
Other chemical & pharmac. products
38
Other industries
39
Bread, pasta and other
transformed products
26
Transformed vegetable and fruit
products
27
Fats and oils
28
Feed
29
Transformed tobacco
30
Sugar
31
beverages
32
Services
Transportation, communication,
credit
40
Other services
41
14
Implications
Decoupling
An example of a Center Italy Farm
Costs/Returns Ratio(%)
With
premium
Without
Premium
Durum Wheat
63,8
125,8
Soft Wheat
74,1
103,0
Dried Forage
21,7
15
Ranking the Scenarios
The scenarios have been ranked according to:
The producers’ point of view
(choice based on production protection and value added)
The agro-industry point of view
(choice based also on other aspects)
The consumers and society’s point of view
(choice based on inflation and welfare).
22
The Producers’ point of view
SIMULAZIONE REGOLA DI BORDA PER VARIAZIONE DI PRODUZIONE
Peso VA
0,019
0,021
0,016
0,058
0,037
0,025
0,032
0,026
0,182
0,013
0,002
0,004
0,006
0,045
0,038
0,193
0,027
0,058
0,092
0,005
0,014
0,086
Prodotto
Grano Tenero
Grano Duro
Riso
Mais e altri cereali
Foraggi irrigui
Foraggi non irrigui
Patate
Pomodori
Altri vegetali
Barbabietole
Soia
Altre colture industriali
Tabacco
Vite
Olivo
Frutta e Agrumi
Floricoltura
Allevamenti da latte
Allevamenti da carne
Silvicoltura
Ovicaprini
Altri animali
D1
-27,81
-36,33
0,16
-0,77
16,31
30,33
1,76
1,82
-0,56
2,49
-80,67
-20,59
2,20
0,16
0,37
0,31
2,23
5,2
1,22
2,11
-2,51
2,30
Variazione
D2Amax D2Bmax
-18,99
-30,21
-25,90
-13,45
-0,48
-0,30
0,13
-1,15
12,14
17,14
22,27
17,43
0,24
0,23
0,27
0,26
0,43
0,42
1,91
2,11
-74,22
-80,80
-13,49
-28,94
1,52
1,75
0,07
0,07
0,08
0,09
0,11
0,11
1,66
1,82
3,89
4,21
1,09
1,33
1,33
1,41
-1,96
-3,29
1,90
1,38
D1
1
0
2
1
1
2
2
2
0
2
1
1
2
2
2
2
2
2
1
2
1
2
Votazione
D2Amax D2Bmax
2
0
1
2
0
1
2
0
0
2
1
0
0
0
0
0
1
1
0
1
2
0
2
0
0
1
0
0
0
0
0
0
0
1
0
1
0
2
0
1
2
0
1
0
Totale Pesato x VA
D1
D2Amax D2Bmax
0,019
0,039
0,000
0,000
0,021
0,042
0,031
0,000
0,016
0,058
0,117
0,000
0,037
0,000
0,073
0,050
0,025
0,000
0,063
0,000
0,000
0,052
0,000
0,000
0,000
0,182
0,182
0,027
0,000
0,013
0,002
0,005
0,000
0,004
0,008
0,000
0,011
0,000
0,006
0,091
0,000
0,000
0,076
0,000
0,000
0,387
0,000
0,000
0,054
0,000
0,027
0,117
0,000
0,058
0,092
0,000
0,183
0,010
0,000
0,005
0,014
0,028
0,000
0,172
0,086
0,000
1
Totale voti
33
14
13
1,367
La regola di voto prevede di assegnare un voto maggiore alla variazione positiva maggiore o alla variazione negativa minore.
Il voto ex equo viene attribuito nel caso in cui le differenze siano inferiori a ± 0.03 e riceve il punteggio inferiore.
0,510
0,606
23
The AgroIndustry Point of View
% Change
Weights
Products
D2A
D2B
D1
max
max
0.5
soft wheat
-27.81 -18.99 -30.21
0.5
durum wheat
-36.33 -25.90 -13.45
0.5
corn and other cereals
-0.77
0.13
-1.15
1.0
fodder (sileage)
16.31 12.14
17.14
1.0
dried fodder
30.33 22.27
17.43
0.5
soy beans
-80.67 -74.22 -80.80
0.5
other industrial crops
-20.59 -13.49 -28.94
0.5
milk
5.2
3.89
4.21
0.5
beef
1.22
1.09
1.33
0.5
sheep and goats
-2.51 -1.96
-3.29
0.5
cereal products
-0.03 -0.02
-0.02
0.5
meat
0.46
0.41
0.39
0.5
dairy products
0.48
0.28
0.31
0.5
fats and oils
-0.60 -0.51
-0.73
1.0
feed
-2.44 -1.54
-2.24
1.0
fertilizers
-7.17 -5.05
-4.31
1.0
pesticides
-3.49 -2.52
-2.60
0.5
Agri-food trade deficit
12.60 9.00
8.60
0.5
land price
18.29 14.24
15.45
0.5
dependent labor
-0.11
0.08
0.10
0.0
farm labor
-0.76 -0.35
-0.29
0.5
farm-hh income (non profes) 0.03
0.09
0.11
1.0
farm-hh income (profes)
0.58
0.50
0.53
1
Total
D1
1
0
1
1
2
1
1
2
1
1
0
2
2
1
2
2
2
0
0
0
0
0
2
24
Borda Vote
D2A
D2B
max
max
2
0
1
2
2
0
0
2
1
0
2
0
2
0
0
1
0
2
2
0
0
0
0
0
0
0
2
0
0
1
1
0
0
1
1
2
2
1
1
1
1
2
1
1
0
0
21
16
Weighted Vote
D2A
D2B
D1
max
max
1
1
0
0
1
1
1
1
0
1
0
1
2
1
0
1
1
0
1
1
0
1
0
1
1
0
1
1
1
0
0
0
0
1
0
0
1
0
0
1
1
0
2
0
1
2
1
0
2
0
1
0
1
1
0
1
1
0
1
1
0
0
0
0
1
1
2
0
0
17
11
824
The Consumer Point of View
PRODUCTS
D1
D2AMax
D2B Max
% Change
% Change Weighted % Change Weighted
Consumer
Food Budget Consumer Weighted Consumer D2A
D2B
Price
Price
Max
Price
Max
Share
D1
Fish
0.087
0.07
0.006
0.04
0.003
0.04
0.003
Beef
0.228
-0.13
-0.030
-0.13
-0.030
-0.12
-0.027
Milk and Dairy Products
0.138
-1.26
-0.174
-1.16
-0.160
-1.18
-0.163
Bread, Pasta, other cereals
0.167
0.02
0.003
0.00
-0.001
0.00
-0.001
Veg and Fruits
0.176
-0.03
-0.005
-0.05
-0.009
-0.04
-0.007
Oils and Fats
0.038
0.01
0.000
0.00
0.000
0.06
0.002
Sugar, Coffee and Others
0.074
-0.31
-0.023
-0.26
-0.019
-0.28
-0.021
Beverages
0.092
-0.10
-0.009
-0.09
-0.008
-0.09
-0.008
Change in Consumer Price Index
for Food Products
Variance of Consumer Price Index
for Food Products
-0.231
0.0036
-0.223
0.0030
-0.221
25
0.0031
Social Welfare Rankings
Household Class
Mean
Initial Population Share of
Income level Income level Share Total Income
in €uro in billions €
Limited-resource
5552
0.353
0.003
0.001
Retirement
19225
0.390
0.001
0.001
Residential/lifestyle
27892
0.516
0.001
0.001
Farming occupation/lower-sales
3727
0.387
0.005
0.001
Farming occupation/higher-sales
19152
7.044
0.018
0.014
Large family farms
104985
20.656
0.010
0.041
Very large family farms
631457
19.662
0.002
0.039
Rural
22814
61.401
0.130
0.123
High income
44416
190.359
0.208
0.382
Mid income
19130
163.974
0.415
0.329
Low income
7838
33.577
0.208
0.067
Total / mean
82381
498.320
1.000
1.000
Initial
D1
D2Amax
D2Bmax
55858
Initial
0.389
55856
D1
0.3911
55867
D2Amax
0.3911
55876
D2Bmax
0.3912
Abbrev Social Welfare
W=y_a*exp(-I)
Gini index by scenario
26
Pareto Rankings
Pareto Ranking – Welfare % changes
Limited-resource
Retirement
Residential/lifestyle
Small
Medium
Large family farms
Very large family farms
rural
high income
mid income
low income
mean
D1
% change
D2Amax
% change
D2Bmax
% change
-0.070
-0.005
0.004
-0.080
0.020
0.040
0.430
0.450
0.490
0.030
0.120
0.140
0.780
0.680
0.720
0.540
0.430
0.450
0.280
0.210
0.210
-0.020
-0.020
-0.030
-0.010
-0.010
-0.020
-0.020
-0.020
-0.020
-0.008
-0.010
-0.020
0.25
0.27
0.30
27
It follows that …





Total Decoupling is preferrable from the
producer point of view
The level of well-being increases especially for
the medium and large farm-households
The reform does not significantly affect
consumer prices
The level of social welfare and society’s income
distribution are not affected by the reform
Decoupling benefits especially the professional
farms
28
Equity and Efficiency
Equity in the agricultural reform debate in Italy is not an
issue at the macro level (with the exception of the non
professional households in the South)


However, the equity question is open within the household
society:

what is the reorganization of the household due to policy
changes in the farms deciding to “Disactivate?” or to
“leave livestock” or … need to get “real”, i.e. micro!
 How does the reform affects labor/leisure allocations and
welfare levels?
 Can we regionalize the macro-results with the micro
approach?
A related practical question: How much of the macrodetail is maintained at the micro-level and viceversa?
29
The Micro-Macro Link

Exact aggregation theory

The micro(macro) level is obtained by zooming in
(out) the macro(micro) level

One single source of information feeds both the
micro and macro behavioral model:

the ISMEA survey about the socio-economic conditions of
Italian Agriculture was designed ad hoc to construct the
micro/macro link and to support a collective approach to
the theory of the household
30
The Micro Level
The Farm Household Model
within a
Collective Framework
31
The Farm-household Framework




The household enterprise, be it a farm or a firm, is
the micro-level mirror image of the macroeconomy: an ANALOGY principle
At the household level, production and
consumption decisions are non separable
As far as information about home production is
available and modeled, urban households are
household enterprises as rural households do
The collective approach permits deducing the
welfare levels of individual household members
thus making it possible to account for gender and
inter-generational differences in the evaluation of
policy impacts
32
A Challenging Motivation


To determine how much money is needed to
make each household member as well off as
they were before a change in living conditions,
compensations should be defined on the basis
of individual rather than household welfare
This requires the knowledge of individual
utilities
that
are
derivable
from
the
identification of the rule governing the intrahousehold allocation of resources within a
collective approach … (from inter-household to interpersonal comparisons)

Labor/leisure choices are individual
33
The Edgeworth’s Box and
the cooperative Nash solution
Um
Um
W=(Uf-Vf(Um-Vm)
A
Core
Set of
negotiation
Contracts
curve
Uf
e Threat point
B
Uf
36
Research Program:
model of a Micro-Economy
(Production and Consumption)
Ma x U i ( xi , zi , li , di )
N
st
p x
j 1
x
ij
i  m, f
 wi oi  i  pq  rF   i  wm , w f , y   Y
zi   ( xi , hi , d )
q j   ( F , fi , d )
li  T  hi  oi  fi
38
A Miniature Gen Eq Model
of the Household Enterprise

Reduced Form of the Micro Economy
Production
Consumption
q j   ( F , fi , d )
xi  x ( p,  ( p, r , w, d ))
Fj   ( p, r , w, d )
zi  z ( p,  ( p, r , w, d ))
fi   ( p, r , w, d )
li  l ( p,  ( p, r , w, d ))
zi   ( xi , h i , d )
hi  h i ( p, r, w; d )
T  l i  oi  hi  f
i
39
Informational Requirements to
Implement the Collective Approach
φ is the sharing rule governing the intra-household allocation
of resources. The existence of the sharing rule implies
that we can recover individual consumptions and utility
•
•
•

Labour/Leisure
Consumption
Consumption and Labour (and Production)
The Farm-household Information set is 3 + at least
one exclusive good
40
Graphically … how does power changes
as the wife’s wage increases
1
predicted sharing rule
.8
.6
.4
.2
1
2
3
Wife's wage (log)
54
Descriptive Statistics of the Variables
used in the Econometric Analysis – Cons. Side
Variable
Mean
Std. Dev.
Couple full income - log
9.002
0.2366
Male Budget Shares
Domestic
Food
Clothing
Other goods
Leisure
0.215
0.156
0.003
0.212
0.415
0.1164
0.0684
0.0029
0.1120
0.1465
Female Budget Shares
Domestic
Food
Clothing
Other goods
Leisure
0.268
0.135
0.003
0.184
0.410
0.1335
0.0614
0.0024
0.1027
0.1572
3.540
2.369
1.858
6.547
2.256
3.855
1.956
2.226
0.5756
0.2541
0.9570
0.6521
0.0485
0.6990
0.9203
0.0619
Prices in Log
Male domestic
Food
Male clothing
Other goods
Male leisure
Female domestic
Female clothing
Female leisure
Demographic Characteristics
North
South&Islands
Hill
No. of children
Wife education
D.my =1 wife decides on off farm labour
Male full income in log
Female full income in log
Male non labor income in log
Female non labor income in log
D.my =1 if farm inherits by the husband
Wife and husnad age poroportion
Wife and husnad education proportion
Wife and husband relative price of leisure
Wife and husband relative price of clothing
Husband age / mean (husband age)
D.my =1 if high educated husband
Z1 – Log of family labour, hours per month
Z2 – Log of 5% of capital
Z3 – Log of total hectares
0.363
0.416
0.771
1.367
1.169
0.068
8.225
8.376
4.643
6.719
0.658
0.479
0.420
0.971
1.413
1
0.545
5.296
4.412
1.658
1.0925
0.4246
0.2642
0.2546
3.7545
2.5633
0.0235
0.0878
0.0463
1.2641
0.2104
0.8313
1.9367 57
1.7271
The Production side of the Household Economy

Household Production – A CRS Technology
Own and Cross-price Elasticities
Husband
Wage
Wife
Wage
Others
Wage
Price of
Inputs
Husband Domestic Share
-0.147
0.420
-0.911
2.580
Wife Domestic Share
-0.558
-0.958
1.350
0.089
Other Components Domestic Share
-0.029
-0.137
-1.650
0.619
Demand for Inputs - Share
-0.060
0.278
-0.670
-0.939
58
Farm Production
Input price
Hired labour
Chemicals
Materials
-0.3647
0.1403
0.1866
Chemicals
0.304
-0.6513
0.3094
Materials
0.3095
0.2411
-0.6072
Hired labour
Output Elasticities - Factors
Crops
Fruits and Other
Vegetables
Milk
Livestock
Hired labour
0.266
0.006
0.234
0.061
Chemicals
0.335
-0.155
0.036
0.029
Materials
0.222
0.073
0.265
-0.109
59
Farm Production
Elasticities with respect to Farm Characteristics - Factors
North
South
Planes
Head’s
Age
Head’s
Educ
No.Children/
Ha
Hired labour
0.339
0.674
0.181
0.123
0.055
-0.010
Chemicals
0.102
-0.366
0.335
0.081
0.020
0.045
Materials
-0.245
-1.012
-0.088
0.311
0.000
0.059
Allen Elasticities of substitution - Factors
Hired labour
Chemicals
Materials
Hired labour
Chemicals
Materials
-2.923
0.364
0.396
-2.698
0.999
-1.961
60
Farm production
Shadow Wage, Wage off and Wage of Hired Labour
by Farm Typologies, values are in Italian Lire
Shadow wage
Wage-off
Wage hired
labour
Sample
8571
11589
8896
Limited-resource
1515
12083
10360
Retirement
3851
19240
10319
Residential/lifestyle
4146
12795
14535
Farming occupation/lowersales
2286
11293
12030
Farming occupation/highersales
5020
11339
8038
Large family farms
12677
11684
8301
Very large family farms
34390
11625
9378
61
The Consumption side of the Household Economy
Gender Specific
Elasticities
Compensated
Price
and
Income
Husband
Domestic good
Food
Clothing
Other
Leisure
Income
Domestic good
-0.338
0.007
0.036
0.045
0.142
0.410
Food
0.005
-0.409
0.071
0.071
0.106
0.115
Clothing
0.001
0.002
-0.199
-0.001
0.001
0.085
Other
0.044
0.097
-0.041
0.037
-0.074
0.191
Leisure
0.288
0.303
0.134
-0.153
-0.176
1.998
Wife
Domestic good
Food
Clothing
Other
Leisure
Income
Domestic good
-0.254
0.022
-0.005
0.041
0.134
0.484
Food
0.011
-0.390
0.051
0.065
0.085
0.115
Clothing
0.000
0.001
-0.205
0.000
0.001
0.096
Other
0.028
0.089
0.020
0.056
-0.068
0.140
Leisure
0.215
0.278
0.139
-0.162
-0.152
1.960
62
The Consumption side of the Household Economy
Demographic Elasticities
Husband
North
South-Island
No. Children
Wife educ.
Domestic good
-0.069
0.062
-0.006
0.012
Food
0.249
-0.100
0.154
-0.018
Clothing
0.095
0.203
0.136
-0.002
Other
0.004
0.016
-0.014
-0.032
Leisure
-0.056
-0.005
-0.046
0.016
Wife
North
South-Island
No. Children
Wife educ.
Domestic good
0.051
0.066
-0.028
-0.027
Food
0.239
-0.098
0.153
-0.025
Clothing
0.033
0.123
0.123
0.001
Other
0.009
0.016
-0.016
0.007
Leisure
-0.109
-0.019
-0.024
0.021
63
Intrahousehold Resources Allocation
Summary of Predicted and Actual Sharing Rule
Variable
Mean
Std. Dev.
Min.
Max.
Husband
Predicted sharing rule
0.401
0.0447
0.252
0.615
Actual sharing rule
0.463
0.0505
0.291
0.705
Marginal Effects of the Sharing Rule
Variable
Coefficient
Std. Error
Husband non labour incombe (in log)
-0.0011
0.6534
Wife non labour incombe (in log)
0.0001
0.5438
Dummy = 1 if wife decides on off-farm labour
-0.0079
7.9926
D.my =1 if farm inherits by the husband
-0.0039
3.5816
Wife and husband age proportion
-0.0487
69.3667
Wife and husband education proportion
0.0232
21.9343
Wife and husband relative price of leisure
-0.1243
47.4734
Wife and husband relative price of clothing
-0.0002
2.3346
64
From the Econometrics
to General Equilibrium by Household Type

The estimated production technology and
consumption preferences have been included
in the household general equilibrium model,
so no need for calibration

Aggregation costs

In the future, econometric estimates for the
23 sectors
66
CAP Reform-% Change in Production (Xs) and
Domestic Cons. prices (Pd)-Total Decoupling Scenario
Crops
1 Soft Wheat
2 Durum wheat
3 Rice
4 Corn
5 Fodder
6 dry hay
7 Potatoes
8 Tomatoes
9 Other vegetables
10 Sugar beet
11 Soy beans
12 Other industrial crops
13 Tabacco
total
Fruits and vegetables
14 Grapes
15 Olives
16 Citruses, fresh and dry fruits
17 Floricolture
20 Forestry
total
Milk
18 Milk and milk products
total
Livestock
19 Beef
21 Sheep and goats
22 Other livestock
total
Xs
Production
-27.64
-36.11
0.20
-0.71
16.32
30.36
1.80
1.86
-0.52
2.48
-80.67
-20.68
2.19
Pd
Domestic Price
0.60
0.60
-1.06
-1.15
-10.49
-15.25
-0.83
-0.77
0.27
-1.20
0.60
11.15
-0.95
0.18
0.38
0.32
2.27
2.19
-0.11
-0.39
-0.13
-0.91
-0.92
5.21
-2.96
1.22
-2.49
2.35
-0.72
0.69
-1.11
weight
5.36%
8.29%
3.20%
18.81%
10.89%
7.26%
3.38%
4.17%
25.75%
4.56%
1.83%
1.46%
5.04%
100.00%
23.21%
18.68%
30.25%
23.30%
4.57%
100.00%
34.34%
9.44%
56.22%
100.00%
weighted
weighted Pd
Xs
0.03
-1.48
0.05
-2.99
-0.03
0.01
-0.22
-0.13
-1.14
1.78
-1.11
2.20
-0.03
0.06
-0.03
0.08
0.07
-0.13
-0.05
0.11
0.01
-1.48
0.16
-0.30
-0.05
0.11
-2.34
-2.17
0.04
0.07
0.10
0.53
0.10
0.84
-0.03
-0.07
-0.04
-0.21
-0.04
-0.39
5.21
-2.96
0.42
-0.24
1.32
1.50
-0.25
0.07
-0.62
-0.81
67
% Changes in Factor Prices
Total Decoupling Scenario
% Change of Factor Prices
Dependent Labor
Farm Labor
Non Agricultural Capital
Agricultural Capital
Land
0.05
-0.57
0.07
-4.45
18.27
68
SAM
Sectors
of Non Professional Farm Household Type
SOCIAL ACCOUNTING MATRIX – NON PROFESSIONAL FARM HOUSEHOLD TYPE
Family
Other
Domestic Market
Sectors Factors Land
Family
Leisure
Economy Total
labor
incomes
good
good
5225
5225
Factors
3411
3411
Land
Family
labor
Family
Other
incomes
Leisure
Domestic
good
Market
goods
Economy
937
937
877
877
Total
5225
937
877
1660
3728
1829
9031
1660
3411
3411
3728
3728
1829
1829
2530
2530
944
937
877
1660
9031
2530
1660
3728
1829
2530
6885
6885
69
Main features of Non Professional and
Professional Farm-Household Types
Non professional
Professional
number of observations
309
947
farm dimension
6.34
15.27
Family size
3.32
3.86
Number of children
1.10
1.50
on farm wage
4.62
10.38
off farm wage
8.15
10.25
input demand in share
hired labor
0.07
0.08
material
0.17
0.29
chemical
0.06
0.07
capital
0.36
0.20
land
0.18
0.16
family labor
0.17
0.19
production in share
crop production
beef production
milk production
fruit production
0.40
0.20
0.04
0.37
0.40
0.25
0.23
0.12
income
full income
saving
9031.56
16391.79
943.82
7950.13
total cost
cost
5224.81
13941.78
71
VARIABLE INPUT
Micro-Simulation
Variables of Interest
Hired labor
Chemical
Material
QUASI-FIXED INPUTS
Capital
Land
Family labor on
Husband
Wife
OFF-FARM LABOR
Husb. off farm lab
Wife off farm labor
OUTPUT
Crop production
Beef production
Milk production
Fruit production
TOTAL PRODUCTION COST
SHADOW WAGES
On farm wage
Capital price
Land price
OFF-FARM WAGES
INCOME AND SAVINGS
Full income
Off farm income
Domestic income
Leisure value
On farm income
HUSBAND AND WIFE CONSUMPTION
Leisure
Clothing
Domestic good
Food
Other goods
72
Intra-hh Allocation Matters:
from 0.46 (husb) to 0.5 shift in the sharing function
base
simul
VARIABLE FACTOR
Hired labor
Chemical
Material
107.418
0.888
2.265
111.096
0.813
2.115
QUASI FIXED FACTOR
Family labor on
Husband
Wife
221.037
148.905
72.132
177.256
119.411
57.844
OFF FARM LABOR
Husb off farm lab
Wife off farm lab
9.426
13.13
8.972
38.685
var%
3.424
-8.427
-6.648
-19.807
-19.807
-19.807
-4.815
194.637
OUTPUT
Crop prod
Beef prod
Milk prod
Fruit prod
On farm wage
104.444
6.277
27.301
19.197
99.602
5.88
26.043
18.659
SHADOW WAGE
-4.636
-6.328
-4.61
-2.804
11.589
18.715
9.762
FULL INCOME
Full income
Off farm income
Domestic income
Husband
Wife
Leisure value
Husband
Wife
On farm income
Husband
Wife
14508.76
261.4
1960.3
789.92
1170.38
3398.9
1582.69
1816.21
2157.76
1453.61
704.15
14785.011
552.299
2041.535
903.852
1137.683
3499.282
1754.909
1744.374
2054.215
1383.855
670.36
HUSBAND CONSUMP
1.904
111.285
4.144
14.423
-2.794
2.953
10.881
-3.955
-4.799
-4.799
-4.799
Husb expendit
Leisure demand
Cloth demand
Domestic good d.
Food demand
Other good dem.
3870.07
0.409
0.003
0.204
0.156
0.227
4281.716
0.41
0.003
0.211
0.152
0.223
WIFE CONSUMP
10.637
0.221
-2.237
3.422
-2.334
-1.834
Wife expenditure
Leisure demand
Cloth demand
Domestic good d.
Food demand
Other good dem
4484.68
0.405
0.003
0.261
0.135
0.196
4285.635
0.407
0.003
0.265
0.132
0.193
-4.438
0.505
-2.006
1.721
-2.359
-1.681
73
Modelling a Labor Market Failure as
a Mixed Complementarity Problem


g
FS _ labg w _ off g  wage _ on  0
Where:

G
=
FS _ labg  0
if
w _ off  wage _ on
FS _ labg  0
if
w _ off  wage _ on
husband , wife
PROFESSIONAL: observed wage gradient
w_off
<
wage_on
→
FS_labg = FS_labg0
w_off
≥
wage_on
→
FS_labg < FS_labg0
(Upper bound)
NON PROFESSIONAL: observed wage gradient
w_off
>
wage_on
→
FS_labg = FS_labg0
w_off
≤
wage_on
→
FS_labg > FS_labg0
(Lower bound)
74
Modelling a Labor Market Failure:
Professional Farm Household Type
PROFESSIONAL FARM HOUSEHOLD TYPE
Variable
Description
Base
w_off decrease
w_off increase
Husband
w_off
wage_on
w_lei
w_dom
Off farm wage
hours_off
Off farm labor
Percentage variation
3.672
On farm labor
Percentage variation
XD_leis
Leisure demand
Percentage variation
XD_dom
Domestic good demand
Percentage variation
Time
Time constraint
FS_lab
On farm wage
Leisure value
Domestic wage
11.450
12.746
9.555
9.555
10.000
12.746
9.555
9.555
4.363
15.000
15.000
9.555
9.555
19.749
(18.805%)
(437.736%)
140.392
140.392
114.189
158.185
157.860
162.924
(-18.664%)
(-0.205%)
(2.996%)
82.440
82.074
87.827
(-0.444%)
(6.535%)
384.689
384.689
384.689
11.450
12.746
9.277
9.277
10.000
12.746
9.277
9.277
15.000
15.000
9.277
9.277
11.803
11.302
(7.310%)
(2.753%)
Wife
w_off
wage_on
w_lei
w_dom
Off farm wage
hours_off
Off farm labor
Percentage variation
10.999
On farm labor
Percentage variation
64.696
Leisure demand
Percentage variation
191.863
Domestic good demand
Percentage variation
130.986
Time constraint
398.544
FS_lab
XD_leis
XD_dom
Time
On farm wage
Leisure value
Domestic wage
64.696
52.620
(-18.664%)
191.441
(-0.220%)
130.604
(-0.291%)
398.544
198.037
(3.217%)
136.585
(4.275%)
398.544
75
Modelling a labor market failure:
Non Professional Farm Household Type
NON PROFESSIONAL FARM HOUSEHOLD TYPE
Variable
Description
Base
w_off decrease
w_off increase
Husband
w_off
wage_on
w_lei
w_dom
Off farm wage
hours_off
Off farm labor
Percentage variation
38.675
On farm labor
Percentage variation
92.135
Leisure demand
Percentage variation
188.490
FS_lab
XD_leis
On farm wage
Leisure value
Domestic wage
XD_dom
Domestic good demand
Percentage variation
Time
Time constraint
8.150
5.985
9.555
9.555
4.800
4.800
9.555
9.555
8.500
5.985
9.555
9.555
36.952
37.423
(-4.455%)
(-3.236%)
122.797
92.135
(33.279%)
173.615
83.312
(0.338%)
69.248
83.927
(-16.880%)
402.612
189.127
(-7.892%)
(0.738%)
402.612
402.612
4.800
4.800
9.277
9.277
8.500
5.985
9.277
9.277
Wife
w_off
wage_on
w_lei
w_dom
Off farm wage
hours_off
Off farm labor
Percentage variation
28.528
On farm labor
Percentage variation
54.399
Leisure demand
Percentage variation
207.762
XD_dom
Domestic good demand
Percentage variation
111.366
98.451
Time
Time constraint
402.055
402.055
FS_lab
XD_leis
On farm wage
Leisure value
Domestic wage
8.150
5.985
9.277
9.277
40.760
27.220
(42.878%)
(-4.584%)
72.503
54.399
(33.279%)
190.341
(-8.385%)
(-11.597%)
208.510
(0.360%)
111.926
(0.503%)
402.055
76
What is next?
IMPROVEMENTS ON THE MICRO-MACRO LINK:
MACRO:
11 hh enterprises where production and consumption
are non separable 23 production sectors for each type
MICRO: 1 HOUSEHOLD – 1 SOCIAL ACCOUNTING
MATRIX (SAM)
so that we can have a fully implemented econometric
micro-simulation with the advantage of simulating
participation choices and other corner solutions more
effectively
REGIONALIZATION OF THE MACRO MODEL:
Regionalization using a bottom up approach aggregating
the household SAMs at the intermediate macro level
79
Conclusions

(1)The Micro-Macro link can be successfully built
if the developers of the micro and macro models
work closely in the phases of model and survey
design within the same institution so that the
micro-macro correspondence can be effectively
incorporated

(2) For a sound micro-macro link to be
established macro models should be microfundated and micro models should be macro
related using exact aggregation theory
80