Skip to main content
SpringerLink
Log in

Natural circumstances and farm labor supply adjustment: the response of the farm labor supply to permanent and transitory natural events

  • Published:
Environment, Development and Sustainability Aims and scope Submit manuscript

Abstract

Labor supply adjustment is one of the main mechanisms of farm households, which is often utilized to alleviate the impact of undesired natural circumstances. Nevertheless, how does the farm labor supply respond to the different attributes of natural circumstances, which may be permanent or transitory? This was an interesting research question and needed to be investigated. Therefore, using the matched data from the Socio-economic Survey (SES) of Thai Agricultural Households and Labor, the studies’ survey of saline soil, the times series information on regional rainfall in the Northeastern region of Thailand, and the implementation of regression analysis, including the income decomposition technique based on the permanent income hypothesis, the results showed that both permanent and transitory income generated by natural events had a significant effect on the farm labor supply. The farm labor supply had a higher response to transitory income that was determined by rainfall variation compared to permanent income, which was determined by both natural and non-natural factors. There was also evidence that natural permanent income generated by a natural event had a higher impact than non-natural permanent income. Overall, this paper found that natural circumstances could deteriorate the welfare of farm households by forcing them to work harder. Government support should thus be provided both in the short and long run.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Data availability

The data that support the findings of this study are available from the corresponding author, upon reasonable request.

Notes

  1. In the stricter version, which comprises all the assumptions of the permanent income hypothesis; for instance, complete financial market, no liquidity constraints, no precautionary saving behavior, etc., the response of consumption smoothing mechanisms should be expected; such as, savings, borrowing, labor supply adjustments, etc., to have permanent income close to zero, while the response to transitory income should be closer to one. However, the empirical results of most previous studies on this topic were rarely consistent with this prediction even in the developed countires.

  2. All the other factors that tended to be treated by the unit and affected as accidental or chance occurrences determined the transitory income (Friedman, 1957).

  3. The definition and measurement of permanent income was considerably discussed by Mayer (1972) and Chao (2001).

  4. Saline soil management includes leaching, drainage, and chemical treatments (Bauder et al., 2014; DERM, 2011; Machado and Serralheiro, 2017; Provin and Pitt, 2001). Jamil et al. (2011) indicated that more than 50% of the arable land would be salinized by the year 2050.

  5. The surveyed areas of saline soil may be greatly different to areas where households in the SES were located. Any households that were not located in the surveyed area of saline soil were eliminated. Additionally, in the 2005/2006 SES, only rice farmers were selected because the salt tolerance of the plants was different; thus, using a sample with many cultivated crops may cause the results to be inexact.

  6. Refer to the example of the calculation of EC50 and EC150 in Table 5.

  7. Shaw (1999) classified the EC1:5 value subject to four levels of clay components. This paper used the case of 10–20% clay because there was usually little clay in the soil components in Northeastern Thailand. Under this condition, the EC1:5 was categorized as: < 0.07 (very low), 0.07-0.14 (low) 0.15–0.33 (medium), 0.34–0.62 (high), 0.63–0.92 (very high), and > 0.93 (extreme).

  8. The SES of Thai agricultural households and labor asked about soil problems to which households answered with their subjective view. This study used this question to generate another type of saline soil measurement. The variable was 1 if households reported the existence of saline soil on their land, and 0 if otherwise.

  9. Since only one period of cross-sectional data was used, the permanent income was defined over a short time horizon like Paxson (1992). Therefore, permanent income was the expected income for a period of time that was conditional on a household’s resources at the beginning of the period.

References

  • Ajefu, J. B. (2017). Income shocks, informal insurance mechanisms, and household consumption expenditure: Micro-evidence from Nigeria. International Journal of Social Economics, 44(12), 1818–1832. https://doi.org/10.1108/IJSE-04-2015-0094

    Article  Google Scholar 

  • Badiani, R., & Safir, A. (2008). Coping with aggregate shocks: Temporary migration and ther labor responses to climatic shocks in rural India, Working Paper.

  • Baez, J. E. (2006). Income volatility, risk-coping behavior and consumption smoothing mechanisms in developing countries: A survey. Revista Desarrollo y Sociedad, 58, 37–83.

    Google Scholar 

  • Bauder, T.,Waskom, R.M., Davis, J. G., & Andales, A. A. (2014). Diagnosing saline and sodic soil problems. Fact Sheet No. 0.521, Colorado State University.

  • Beegle, K., Dehejia, R., & Gatti, R. (2006). Child labor and agricultural shocks. Journal of Development Economics, 81(1), 80–96. https://doi.org/10.1016/j.jdeveco.2005.05.003

    Article  Google Scholar 

  • Bhalla, S. S. (1980). The measurement of permanent income and its application to savings behavior. Journal of Political Economy, 88(4), 722–744. https://doi.org/10.1086/260899

    Article  Google Scholar 

  • Bollen, K. A., Glanville, J. L., & Guy Stecklov, G. (2007). Socio-economic status, permanent income, and fertility: A latent-variable approach. Population Studies: A Journal of Demography, 61(1), 15–34. https://doi.org/10.1080/00324720601103866

    Article  Google Scholar 

  • Cameron, L. A., & Worswick, C. (2003). The labor market as a smoothing device: Labor supply responses to crop loss. Review of Development Economics, 7(2), 327–341. https://doi.org/10.1111/1467-9361.00194

    Article  Google Scholar 

  • Chao, H. 2001. Milton Friedman and the emergence of the Permanent Income Hypothesis. Tinbergen Institute Discussion Papers 01-053/1, Tinbergen Institute. https://papers.tinbergen.nl/01053.pdf

  • Clermont-Dauphin, C., Suwannage, N., Grunberger, O., Hammecker, C., & Maeght, J. (2010). Yield rice under water and soil salinity risks in farmers’ fields. Field Crops Research, 118(3), 289–296. https://doi.org/10.1016/j.fcr.2010.06.009

    Article  Google Scholar 

  • Danzer, A. M. (2011). Labor supply and consumption smoothing when income shocks are non-insurable, IZA Discussion Papers 5499, Institute of Labor Economics (IZA).

  • Dasgupta, S., Hossain, M. M., Huq, M., & Wheeler, D. (2014). Climate change, soil salinity, and the economics of high-yield rice production in coastal Bangladesh. Policy Research Working Paper No. 7140, World Bank

  • DERM. (2011). Salinity management handbook 2nd. Department of Environment and Resource Management. Queensland Government Publication.

    Google Scholar 

  • Dustin, D. (2015). Consumption smoothing and labor supply allocation decisions: evidence from Tanzania. Master's Theses. The University of San Francisco.

  • Ersado, L., Alderman, H., & Alwang, J. (2003). Changes in consumption and saving behavior before and after economic shocks: Evidence from Zimbabwe. Economic Development and Cultural Change, 52(1), 187–215. https://doi.org/10.1086/380136

    Article  Google Scholar 

  • Fafchamps, M., Udry, C., & Czukas, K. (1998). Drought and saving in West Africa: Are livestock a buffer stock. Journal of Development Economics, 55(2), 273–305. https://doi.org/10.1016/S0304-3878(98)00037-6

    Article  Google Scholar 

  • Fernández, M., Ibáñez, A. M., & Peña, X. (2014). Adjusting the llabour supply to mitigate violent shocks: Evidence from rural Colombia. Journal of Development Studies, 50(8), 1135–1155. https://doi.org/10.1080/00220388.2014.919384

    Article  Google Scholar 

  • Friedman, M. (1957). The Permanent Income Hypothesis. NBER Chapters. In A theory of the consumption function (pp. 20–37). National Bureau of Economic Research, Inc.

  • Haider, M. Z., & Hossian, M. Z. (2013). Impact of salinity on livelihood strategies of farmers. Journal of Soil Science and Plant Nutrition, 13(2), 417–431. https://doi.org/10.4067/S0718-95162013005000033

    Article  Google Scholar 

  • Hall, N. H., Greiner, R., & Yongvanit, S. (2004). Adapting modeling systems for salinity management of farms and catchments in Australia and Thailand. Mathematics and Computers in Simulation, 64(3–4), 319–327. https://doi.org/10.1016/S0378-4754(03)00098-3

    Article  Google Scholar 

  • Howitt, R. E., Kaplan, J., Larson D., MacEwan, D., Medellin-Azuara, J., Horner, G., & Lee, N. S. (2009). The economic impacts of central valley salinity. Final Report to the State Water Resources Control board Contract 05-417-150-0, University of California Davis, 2009.

  • Ito, T., & Kurosaki, T. (2009). Weather risk, wages in kind, and the off-farm labor supply of agricultural households in a developing country. American Journal of Agricultural Economics, 91(3), 697–710.

    Article  Google Scholar 

  • Jamil, A., Riaz, S., Ashraf, M., & Foolad, M. (2011). Gene expression profiling of plants under salt stress. Critical Reviews in Plant Sciences, 30(5), 435–458. https://doi.org/10.1080/07352689.2011.605739

    Article  Google Scholar 

  • Jin, L., Chen, K. Z., Yu, B., & Filipski, M. (2015). Farmers' coping strategies against an aggregate shock: evidence from the 2008 Sichuan earthquake, 2015 Conference, August 9–14, 2015, Milan, Italy 211814, International Association of Agricultural Economists.

  • Kazianga, H., & Udry, C. (2006). Consumption smoothing? Livestock, insurance and drought in rural Burkina Faso. Journal of Development Economics, 79(2), 13–446. https://doi.org/10.1016/j.jdeveco.2006.01.011

    Article  Google Scholar 

  • Kochar, A. (1999). Smoothing consumption by smoothing income: Hours-of-work responses to idiosyncratic agricultural shocks in rural India. Review of Economics and Statistics, 81(1), 50–61. https://doi.org/10.1162/003465399767923818

    Article  Google Scholar 

  • Kongtip, P., Nankongnab, N., Mahaboonpeeti, R., Bootsikeaw, S., Batsungnoen, K., Hanchenlaksh, C., Tipayamongkholgul, M., & Woskie, S. (2018). Differences among Thai agricultural workers’ health, working conditions, and pesticide use by farm type. Annals of Work Exposures and Health, 62(2), 167–181. https://doi.org/10.1093/annweh/wxx099

    Article  Google Scholar 

  • Kovacs, A., Rondinelli, C., & Trucchi, S. (2021). Permanent versus transitory income shocks over the business cycle. European Economic Review, 139, 103873. https://doi.org/10.1016/j.euroecorev.2021.103873

    Article  Google Scholar 

  • Kumar, P., & Sharma, P. K. (2020). Soil salinity and food security in India. Frontiers in Food Sustainable Systems, 4, 1–15. https://doi.org/10.3389/fsufs.2020.533781

    Article  Google Scholar 

  • Kwon, C. W., Orazem, P. F., & Otto, D. M. (2006). Off-farm labor supply responses to permanent and transitory farm income. Agricultural Economics, 34(1), 59–67. https://doi.org/10.1111/j.1574-0862.2006.00103.x

    Article  Google Scholar 

  • Lertamphainont, S., & Sparrow, R. (2016). The economic impacts of extreme rainfall events on farming households: Evidence from Thailand. PIER discussion papers No. 45

  • Machado, R., & Serralheiro, R. (2017). Soil salinity: Effect on vegetable crop growth management practices to prevent and mitigate soil salinization. Horticulturae, 3(2), 30. https://doi.org/10.3390/horticulturae3020030

    Article  Google Scholar 

  • Mammen, K., & Paxson, C. (2000). Women’s work and economic development. Journal of Economic Perspectives, 14(4), 141–164. https://doi.org/10.1257/jep.14.4.141

    Article  Google Scholar 

  • Mayer, T. (1972). Permanent income, wealth, and consumption: A critique of the permanent income theory, the Life-cycle Hypothesis, and related theories. University of California Press.

    Book  Google Scholar 

  • Meng, X. (2003). Unemployment, consumption smoothing, and precautionary saving in urban China. Journal of Comparative Economics, 31(3), 465–485. https://doi.org/10.1016/S0147-5967(03)00069-6

    Article  Google Scholar 

  • Mishra, A. K., Uematsu, H., & Powell, R. R. (2012). Precautionary wealth and income uncertainty: A household-level analysis. Journal of Applied Economics, 15(2), 353–369. https://doi.org/10.1016/S1514-0326(12)60015-4

    Article  Google Scholar 

  • Mitsuchi, M., Wichaidit, P., & Jeungnijnirund, S. (1986). Outline of soil of the northeast plateau: Their characteristics and constraints. Technical Paper No. 1, 24–35. Agricultural Development Research Center (ADRC), Khon Kaen, Thailand.

  • Naing Oo, A., Boonthai Iwai, C., & Saenjan, P. (2013). Food security and socio-economic impacts of soil salinization in northeast Thailand. International Journal of Environmental and Rural Development, 4, 76–81.

    Google Scholar 

  • Otlewska, A., Migliore, M., Dybka-Stępień, K., Manfredini, A., Struszczyk-Świta, K., Napoli, R., Białkowska, A., Canfora, L., & Pinzari, F. (2020). When salt meddles between plant, soil, and microorganisms. Frontiers in Plant Science, 11, 553087. https://doi.org/10.3389/fpls.2020.553087

    Article  Google Scholar 

  • Paxson, C. H. (1992). Using weather variability to estimate the response of savings to transitory income in Thailand. American Economic Review, 82(1), 15–33.

    Google Scholar 

  • Phaithong, C., & Pagdee, A. (2013). Factors affecting rice production in northeastern Thailand: The relationship between soil salinity and vegetative cover. International Journal of Environmental and Rural Development, 4, 25–30.

    Google Scholar 

  • Powell, D. (2020). Does labor supply respond to transitory income? Evidence from the economic stimulus payments of 2008. Journal of Labor Economics, 38(1), 1–38. https://doi.org/10.1086/704494

    Article  Google Scholar 

  • Provin, T., & Pitt, J. L. (2001). Managing soil salinity. Taxas A&M AgriLife Extension.

  • Qadir, M., Quillerou, E., Nangia, V., Murtaza, G., Singh, M., Thomas, R. J., Drechsel, P., & Nobel, A. D. (2014). Economics of salt-induced land degradation and restoration. Natural Resource Forum, 38(4), 282–295. https://doi.org/10.1111/1477-8947.12054

    Article  Google Scholar 

  • Ripplinger, D., Wick, A., & Casey, F. (2015). Econoics of soil salinity. Soill Health & Land Management. NDSU Extenion Service.

  • Shakoor, U., Saboor, A., Ali, I., & Mohsin, A. Q. (2011). Impact of climate change on agriculture: Empirical evidence from arid region. Pakistan Journal of Agricultural Research, 48(4), 327–333.

    Google Scholar 

  • Shaw, R. J. (1999). In K. L. Peverill, L. A. Sparrow, & D. J. Reuter (Eds.), Soil salinity-electrical conductivity and chlorid in soil analysis: An interpretation manual. CSIRO Publishing Melbourne.

    Google Scholar 

  • Singhalampong, E. (2019). Picturing femininity: Portraits of the early modern siamese women. Southeast of Now: Directions in Contemporary and Modern Art in Asia, 3(1), 49–75.

    Article  Google Scholar 

  • Sirisankanan, A. (2015). Risk, uncertainty and consumption smoothing mechanisms: Evidence form Thai household socio-economic panel data. Journal of Southeast Asian Economies, 32, 163–179.

    Article  Google Scholar 

  • Sonon, L. S., Saha, U., & Kissel, D. E. (2015). Soil salinity testing, data interpretation and recommendations. UGA Cooperative Extension Circular 1019.

  • Wang, Y. (1995). Permanent income and wealth accumulation: A cross-sectional study of Chinese urban and rural households. Economic Development and Cultural Change, 43(3), 523–550. https://doi.org/10.1086/452167

    Article  Google Scholar 

  • Wolpin, K. (1982). A new test of The Permanent Income Hypothesis: The impact of weather on the income and consumption of farm households in India. International Economic Review, 23(3), 583–594. https://doi.org/10.2307/2526376

    Article  Google Scholar 

Download references

Acknowledgements

This research project is financially supported by Mahasarakham University, Thialand. The author would like to thank Dr. Butsara Yongkhamcha, department of biology, faculty of science, Mahasarakham University, Thailand, for her helpful advice about saline soil knowledge. The author is grateful to the Office of Agricultural Economics (OAE) for providing the Thailand Socio-Economic survey (SES) of agricultural household and labor data. The author also thanks the Meteorological Department of Thailand for providing rainfall data. In addition, the author thanks the Land Development Department (LDD) of Thailand, which provides and explains saline soil data sources.

Author information

Authors and Affiliations

  1. Faculty of Accountancy and Management, Mahasarakham University, Khamriang Sub-District, Kantarawichai District, 44150, Maha Sarakham, Thailand

    Aeggarchat Sirisankanan

Authors
  1. Aeggarchat Sirisankanan
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Aeggarchat Sirisankanan.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

See Table 5 and Figs. 4, 5.

Table 5 The example of the calculation of EC1:5 value for some selected areas of Huai Dan Basin
Full size table
Fig. 4
figure 4

Yield and cost of farm households classified by the value of EC1:5

Full size image
Fig. 5
figure 5

Rainfall variation classified by rainfall stations

Full size image

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Sirisankanan, A. Natural circumstances and farm labor supply adjustment: the response of the farm labor supply to permanent and transitory natural events. Environ Dev Sustain 25, 9935–9961 (2023). https://doi.org/10.1007/s10668-022-02469-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10668-022-02469-2

Keywords

JEL Classification

Search

Navigation