During the last decade considerable research has been carried out on the non-farm labor supply of farm households. New insights and hypotheses on the economic behavior of households, known as "new home economics," and progress in applying more sophisticated estimation techniques have stimulated these research activities. The focus of this paper is the standard neoclassical model of labor supply and a corresponding empirical research strategy. The empirical model refers to household-level data from West Germany. As the results reveal, farm households decide on the allocation of their resources in a very rational manner. This shows their high capacity and flexibility to adjust to varying economic circumstances.


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