The Effect of Land Assets on the Decision Making of Farm Households

This paper analyzes the decision making of Japanese farm households, with special reference to farm land assets. For the relevant explanation of the behavior of farm household, we propose the New Keynesian model with limited labor markets. The proposed model adequately explains the existing wage differentials, also addresses changes in land assets due to rapidly rising land prices and their effects on production organization and consumption choice of farm households. The main one of empirical results is the increase in land price facilitates the introduction of farm machinery to farming which saves labor in farming, and promotes the outflow of labor.