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

Anthony Cawley; Cathal O'Donoghue; Kevin Heanue; Rachel Hilliard; Maura Sheehan

doi:10.1093/aepp/ppx062

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

Anthony Cawley
, Cathal O'Donoghue
, Kevin Heanue
, Rachel Hilliard
, Maura Sheehan

Rural Economy and Development Programme
University of Galway
Teagasc - Irish Agriculture and Food Development Authority
Edinburgh Napier University

Research output: Contribution to a Journal (Peer & Non Peer) › Article › peer-review

58 Citations (Scopus)

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 - 1 Dec 2018

Keywords

Endogeneity
Extension
Farm income
Instrumental variables
Panel data
Two-stage least squares estimation

Authors (Note for portal: view the doc link for the full list of authors)

Authors
Cawley, A,O'Donoghue, C,Heanue, K,Hilliard, R,Sheehan, M
Cawley, A. P., Heanue, K., ODonoghue, C., Hilliard, RM. and Sheehan, M.

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10.1093/aepp/ppx062

Cite this

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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.",

keywords = "Endogeneity, Extension, Farm income, Instrumental variables, Panel data, Two-stage least squares estimation",

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T2 - An instrumental variable approach to combat endogeneity concerns

AU - Cawley, Anthony

AU - O'Donoghue, Cathal

AU - Heanue, Kevin

AU - Hilliard, Rachel

AU - Sheehan, Maura

PY - 2018/12/1

Y1 - 2018/12/1

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

UR - https://www.scopus.com/pages/publications/85060996827

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M3 - Article

SN - 2040-5790

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SP - 585

EP - 612

JO - Applied Economic Perspectives and Policy

JF - Applied Economic Perspectives and Policy

IS - 4

ER -

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

Abstract

Keywords

Authors (Note for portal: view the doc link for the full list of authors)

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