Local Economic Conditions and Wage Labor Decisions of Farm and Rural Nonfarm Couples

Effects of geographical differences in local economic conditions on wage labor demand and wage labor participation decisions of rural couples are examined for Current Population Survey households 1978–82. Wage premiums are shown to exist for localities anticipating labor demand growth, higher unemployment rates, larger share of employment in services, and higher costs of living. These effects are stronger for males than females. Effects of local economic conditions on the probability of wage work are consistent with expected market wage and reservation wage effects, and for farm households the probability of wage work increases when expected farm output prices decline or the wage increases.