Modeling the effect of off-farm income on farmland values: A quantile regression approach

Abstract

Using the farm household as a unit of analysis and farm-level data, this study examines the impact of off-farm income on farmland values. In contrast to previous studies that assume a homogeneous relationship across the entire distribution, in this study quantile regression is used to estimate the empirical model. Results of this study show the effect of land attributes—captured by regional location and farm program payments; off-farm income on value of farmland can be better explained by estimating quantile regression across farmland value categories. Results indicate that a 1percent increase in off-farm income could increase per-acre farmland value between 0.15 and 0.21%.