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Family Firms and Policy
Department of Agricultural Economics
Tobacco buyout program caused a structural change in economy of Kentucky This project examines the effect of Tobacco Buyout on i) family businesses ii) and the consequent, indirect effects on communities.
2010 Project Description
During the reporting period I continued to analyze the data collected between June 2005 and August 2006, when Kentucky tobacco farmers were just beginning to adjust to the new economic environment. Together with Dr. Maria Marshall from Purdue University using this data I 1)tested predictions of two theories of decision making by family farms, and 2) developed a novel method of how to evaluate personal discount rate from the survey data.
Together with Dr. Vedenov from Texas A&M University I evaluated the effect of internet penetration on the demographics of rural entrepreneurs, and analyzed the determinants of the exit decision from tobacco farming. The results of the analysis were posted on the website http://www.ca.uky.edu/agecon/index.php?p=749.
The projects lead to the following change in knowledge:
1)the Sustainable Family Business model predicts choices of family farms better than Agricultural Household choices;
2) the break-even discount rate and individual biases toward the default option significantly affect the probability that a farmer will choose to take a lump sum payment. We suggested how to estimated personal discount rates from choice data while accounting for these biases;
3) the decision to exit tobacco farming, in addition to production efficiency and availability of alternative employment, is positively correlated with the farmer's tenure, but not the age;
4)the availability of the internet in rural areas changes the demographic profile of rural entrepreneurs.
Pushkarskaya H, Vedenov, D. 2010. How internet penetration into rural communities changes demographics of rural entrepreneurs. Innovative Marketing 6(1): 81-94.
Pushkarskaya H, Marshall MI. Family structure, policy shocks, and family business adjustment choices. Forthcoming in the special Family Business issue of the Journal of Family and Economics Issues in December 2010.