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Off-farm labour participation of Italian farmers, state dependence and the CAP reform

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  • Corsi, A.
  • Salvioni, C.

Abstract

We analyse the determinants of off-farm labour participation of farmers, an issue relevant in view of the agricultural sector coping with increasing productivity and in terms of rural development. We apply a farm-household theoretical model. The data for the empirical analysis are a 5 year (2003-2007) balanced panel of 3294 Italian farms, drawn from the Farm Accounting Data Network. The explanatory variable is the dummy indicator of the farm operator working or not off the farm. The explanatory variables comprise personal, household, and farm characteristics, and few variables of the local labour market. Since in the period a major reform of the Common Agricultural Policy (CAP) took place, we also add related variables. For estimation, we use different dynamic models, accounting for both heterogeneity and state dependence, as well as for the initial conditions (Heckmann, 1981; Wooldridge, 2005; Orme, 2001). Our results suggest that, when keeping into account all these features, present work state is almost totally explained by previous state and by idiosyncratic characteristics, which implies a strong persistence. Variables concerning personal characteristics found to be relevant in cross-sectional analyses are not found to be significant in the dynamic setting. Finally, the variables related to the reform have no statistically significant effect on the decision to work off-farm.

Suggested Citation

  • Corsi, A. & Salvioni, C., 2013. "Off-farm labour participation of Italian farmers, state dependence and the CAP reform," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149886, Italian Association of Agricultural and Applied Economics (AIEAA).
  • Handle: RePEc:ags:aiea13:149886
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    1. Butinya, Lluis & Velazco, Jackeline & Rigall-I-Torrent, Ricard, 2014. "Determinants of on-farm diversification: The case of farmers in Catalonia," Revista Española de Estudios Agrosociales y Pesqueros, Ministerio de Medio Ambiente, Rural y Marino (formerly Ministry of Agriculture), issue 238.

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    Keywords

    off-farm work; farm household; state dependence; panel data; CAP reform; Farm Management; Labor and Human Capital; J220; J430; Q120; Q180;

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