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Abstract

This article focuses on the effect of off-farm work on technical efficiency of a sample of dairy farms in Quebec. The analyzes are based on the estimation of a stochastic model of cost function We hypothesize that producers working outside and those working only on the farm have different observable and unobservable characteristics resulting in a selection bias that must be taken into account. Our results confirm the presence of selection bias. Also, empirical results show that participation in non-farm work exerts a negative and statistically significant effect on technical efficiency of dairy farms. Without correction for selection bias the efficiency scores between the 2 groups are not statistically different.

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