The impact of extension services on farm-level income: An instrumental variable approach to combat endogeneity concerns

A. Cawley; C. O'Donoghue; K. Heanue; R. Hilliard; M. Sheehan

doi:10.1093/aepp/ppx062

The impact of extension services on farm-level income: An instrumental variable approach to combat endogeneity concerns

A. Cawley^*, C. O'Donoghue, K. Heanue, R. Hilliard, M. Sheehan

^*Corresponding author for this work

Structural Change and Economic Development

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

Agricultural extension is an important policy instrument utilized to diffuse knowledge and increase profitability among farmers. However, analyses on impact are subject to endogeneity concerns, causing multiple biases. Failure to combat endogeneity can lead to false inferences on impact. This article addresses this issue by applying an instrumental variable approach with distance to local advisory office and a policy change chosen as instruments for extension participation. The results show that participation significantly increased farm income and that OLS estimates underestimated the impact. Therefore, a superior estimate of impact is achieved which can be leveraged to better support accurate policy making.

Original language	English
Pages (from-to)	585-612
Number of pages	28
Journal	Applied Economic Perspectives and Policy
Volume	40
Issue number	4
DOIs	https://doi.org/10.1093/aepp/ppx062
Publication status	Published - Dec 2018

JEL classifications

q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

Keywords

Endogeneity
Extension
Farm income
Instrumental variables
Panel data
Two-stage least squares estimation
MANAGEMENT
IRELAND
PROPENSITY SCORE
panel data
ADOPTION
two-stage least squares estimation
INCENTIVES
farm income
PROVISION
AGRICULTURAL EXTENSION
instrumental variables
POVERTY
PROGRAMS
endogeneity

Access to Document

10.1093/aepp/ppx062

Cite this

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title = "The impact of extension services on farm-level income: An instrumental variable approach to combat endogeneity concerns",

abstract = "Agricultural extension is an important policy instrument utilized to diffuse knowledge and increase profitability among farmers. However, analyses on impact are subject to endogeneity concerns, causing multiple biases. Failure to combat endogeneity can lead to false inferences on impact. This article addresses this issue by applying an instrumental variable approach with distance to local advisory office and a policy change chosen as instruments for extension participation. The results show that participation significantly increased farm income and that OLS estimates underestimated the impact. Therefore, a superior estimate of impact is achieved which can be leveraged to better support accurate policy making.",

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author = "A. Cawley and C. O'Donoghue and K. Heanue and R. Hilliard and M. Sheehan",

year = "2018",

month = dec,

doi = "10.1093/aepp/ppx062",

language = "English",

volume = "40",

pages = "585--612",

journal = "Applied Economic Perspectives and Policy",

issn = "2040-5790",

publisher = "Oxford University Press",

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T1 - The impact of extension services on farm-level income

T2 - An instrumental variable approach to combat endogeneity concerns

AU - Cawley, A.

AU - O'Donoghue, C.

AU - Heanue, K.

AU - Hilliard, R.

AU - Sheehan, M.

PY - 2018/12

Y1 - 2018/12

N2 - Agricultural extension is an important policy instrument utilized to diffuse knowledge and increase profitability among farmers. However, analyses on impact are subject to endogeneity concerns, causing multiple biases. Failure to combat endogeneity can lead to false inferences on impact. This article addresses this issue by applying an instrumental variable approach with distance to local advisory office and a policy change chosen as instruments for extension participation. The results show that participation significantly increased farm income and that OLS estimates underestimated the impact. Therefore, a superior estimate of impact is achieved which can be leveraged to better support accurate policy making.

AB - Agricultural extension is an important policy instrument utilized to diffuse knowledge and increase profitability among farmers. However, analyses on impact are subject to endogeneity concerns, causing multiple biases. Failure to combat endogeneity can lead to false inferences on impact. This article addresses this issue by applying an instrumental variable approach with distance to local advisory office and a policy change chosen as instruments for extension participation. The results show that participation significantly increased farm income and that OLS estimates underestimated the impact. Therefore, a superior estimate of impact is achieved which can be leveraged to better support accurate policy making.

KW - Endogeneity

KW - Extension

KW - Farm income

KW - Instrumental variables

KW - Panel data

KW - Two-stage least squares estimation

KW - MANAGEMENT

KW - IRELAND

KW - PROPENSITY SCORE

KW - panel data

KW - ADOPTION

KW - two-stage least squares estimation

KW - INCENTIVES

KW - farm income

KW - PROVISION

KW - AGRICULTURAL EXTENSION

KW - instrumental variables

KW - POVERTY

KW - PROGRAMS

KW - endogeneity

U2 - 10.1093/aepp/ppx062

DO - 10.1093/aepp/ppx062

M3 - Article

SN - 2040-5790

VL - 40

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EP - 612

JO - Applied Economic Perspectives and Policy

JF - Applied Economic Perspectives and Policy

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