Adaptive and Simultaneous Strategies in Smallholder Household Economics: A 2SLS Approach to Labor and Consumption Optimization

Abstract

This research is aimed to analyze the economy optimization strategy of smallholder farmer household using adaptive and simultaneous concept approaches. This analysis will focus on the dynamic interaction between the workload, the income, and consumption pattern which is seen as a part of integral from the complex economic system and mutually influence. The study is done based on 227 smallholder farmer household in Indonesia by using simultaneous model approach and Two Stage Square method (2SLS). The analysis result shows the men’s workload in farm is affected significantly by the time from other sector and the income. In the other hand, women’s workload in non-farm sector is increase by the time the amount of the number of dependents and economic intensive.  The total overall income is depended by the contribution of work in the farm and non-farm sector. Besides, the food consumption expenditure is affected by the income, while the non-food consumption expenditure is affected by income and the amount school-child in a family. This finding emphasized that smallholder farmer household applied adaptive and simultaneous strategy in maintaining the worker and outcome to face the economic limitation rationally.