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Duke Economics Working Paper #95-09

Education and Off-Farm Work

Dennis Tao Yang

Abstract

A household time allocation model is developed to explain the empirical regularity that the better educated farm members are usually the first to participate in nonfarm employment. Central to the model is the comparative advantage principle and a knowledge spillover hypothesis that workers who participate in off-farm work may still contribute knowledge to farm management. Using Chinese farm data, it is found that (a) schooling does not contribute to physical efficiency in farming, (b) the highest household schooling contributes the most to allocative efficiency and yet the contribution is not affected by off-farm participation, and (c) education raises off-farm wages. The model's implications from these results are consistent with the observed patterns of time allocation.

JEL: O15, J43

Published in Economic Development and Cultural Change, Vol. 45, No. 3, April 1997, pp. 613-632.