Determinants of Farm Labour Use: A Comparison between Ireland and Italy
AbstractThis paper examines the effect of the decoupling of farm direct payments upon the off-farm labour supply decisions of farmers in both Ireland and Italy. We use panel data from the Farm Business Survey (REA) and FADN database covering the period from 2002 to 2009 to model these decisions. Drawing from the conceptual agricultural household model, we hypothesise that the decoupling of direct payments led to an increase in off-farm labour activity despite some competing factors. This hypothesis rests largely upon the argument that the effects of changes in relative wages have dominated other factors. At a micro level, the decoupling induced decline in the farm wage relative to the non-farm wage ought to have provoked a greater incentive for off-farm labour supply. The main known competing argument is that decoupling introduced a new source of non-labour income i.e. a wealth effect. This may in turn have suppressed or eliminated the likelihood of increased off-farm labour supply for some farmers. For the purposes of comparative analysis, the Italian model utilises the data from the REA database instead of the FADN as the latter has a less than satisfactory coverage of labour issues. Both models are developed at a national level. We draw from the literature on female labour supply and use a sample selection corrected ordinary least squares model to examine both the decisions of off farm work participation and the decisions regarding the amount of time spent working off-farm. The preliminary results indicate that decoupling has not had a significant impact on off-farm labour supply in the case of Ireland but there appears to be a significantly negative relationship in the Italian case. It still remains the case in both countries that the wealth of the farmer is negatively correlated with the likelihood of off-farm employment.
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Bibliographic InfoPaper provided by International Agricultural Trade Research Consortium in its series Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain with number 152331.
Date of creation: Jun 2013
Date of revision:
Labour Supply; Off Farm Employment; Farm Holder; Italy; Ireland; Agribusiness; Farm Management; International Relations/Trade; Labor and Human Capital; J22; J43; Q12;
Other versions of this item:
- Loughrey, Jason & Hennessy, Thia & Hanrahan, Kevin & Donnellan, Trevor & Raimondi, Valentina & Olper, Alessandro, 2013. "Determinants of Farm Labour Use: A Comparison between Ireland and Italy," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152332, International Agricultural Trade Research Consortium.
- Loughrey, Jason & Hennessy,Thia & Hanrahan, Kevin & Donnellan, Trevor & Raimondi, Valentina & Olper, Alessandro, 2013. "Determinants of Farm Labour Use: A Comparison between Ireland and Italy," Factor Markets Working Papers 172, Centre for European Policy Studies.
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-08-16 (Agricultural Economics)
- NEP-ALL-2013-08-16 (All new papers)
- NEP-EUR-2013-08-16 (Microeconomic European Issues)
- NEP-LAB-2013-08-16 (Labour Economics)
- NEP-SPO-2013-08-16 (Sports & Economics)
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