Timing and type of exit from farming: farmers' early retirement programmes in Finland

K. Pietola, M. Vare, A.G.J.M. Oude Lansink

Research output: Contribution to journalArticleAcademicpeer-review

66 Citations (Scopus)

Abstract

We analyse farmers' choice between three discrete occupational options: (1) exit and close down the farming operation; (2) exit and transfer the farm to a new entrant; (3) continue farming and retain the option to exit later. The optimisation problem is formulated as a recursive optimal stopping problem. The unknown parameters are first estimated by a switching-type multivariate probit model and then by the simulated maximum likelihood (SML) method, controlling for serial correlation of the errors. The results suggest that the timing and type of farmer exit decisions respond elastically to the economic environment, and to farmer and farm characteristics.
Original languageEnglish
Pages (from-to)99-116
JournalEuropean Review of Agricultural Economics
Volume30
Issue number1
DOIs
Publication statusPublished - 2003

Keywords

  • family farms
  • models
  • simulation

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