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The role of hired labour on technical efficiency in an expanding dairy sector: The case of Ireland

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  • Garcia-Covarrubias, Luis
  • Läpple, Doris
  • Dillon, Emma
  • Thorne, Fiona

Abstract

The 2015 EU milk quota abolition initiated considerable expansion in the dairy sector. This expansion has increased the demand for additional labour in some EU countries, most significantly in Ireland. This paper explores the role of hired labour on Irish dairy farms' technical efficiency (TE). We use a detailed farm-level panel data set of a representative sample from 2000 to 2018. To estimate transient, persistent, and overall TE over time, we apply a 4-component stochastic frontier model. Our findings show significant variation in TE scores over the period. We also control for endogeneity to obtain marginal effects of hired labour on TE. The results reveal that hired labour has a significant yet small, positive effect on farms' TE. Our findings suggest that the effect of hired labour on TE is larger for small and medium-sized farms. This effect is larger when herd size increases.

Suggested Citation

  • Garcia-Covarrubias, Luis & Läpple, Doris & Dillon, Emma & Thorne, Fiona, 2024. "The role of hired labour on technical efficiency in an expanding dairy sector: The case of Ireland," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 68(02), January.
    • Handle: RePEc:ags:aareaj:343091
    DOI: 10.22004/ag.econ.343091
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    References listed on IDEAS

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    2. Michel Blanc & Eric E. Cahuzac & Bernard B. Elyakime & Gabriel Tahar, 2008. "Demand for on-farm permanent hired labour on family holdings," Post-Print hal-02668945, HAL.
    3. Michel Blanc & Eric Cahuzac & Bernard Elyakime & Gabriel Tahar, 2008. "Demand for on-farm permanent hired labour on family holdings," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(4), pages 493-518, December.
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    6. Lorraine Balaine & Doris Läpple & Emma J Dillon & Cathal Buckley, 2023. "Extension and management pathways for enhanced farm sustainability: evidence from Irish dairy farms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(2), pages 810-850.
    7. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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