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The Common Agricultural Policy and Farmers’ Off-farm Labour Supply

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  • Loughrey, Jason
  • Hennessy, Thia

Abstract

This paper uses farm-level data from Ireland to explore the impact of agricultural policies on the farm operators’ off-farm labour allocation decisions. The hypothesis that decoupled direct payments induce farmers to allocate more time to off-farm employment is tested. Despite earlier studies based Irish data finding evidence to support this hypothesis, the analysis presented here suggests that decoupled direct payments are significantly and negatively associated with both the probability and amount of time allocated to off-farm work. The potential relationship between farm income variability and off-farm employment decisions in the short and medium term for the case of Irish farm operators is also explored. The analysis identifies a positive association between farm income variability and off-farm employment in the medium term but no significant relationship in the short-term. This suggests that off-farm employment is part of a wider portfolio decision and the recent increases in farm income variability due to reforms of the Common Agricultural Policy, has induced farmers to work more off farm.

Suggested Citation

  • Loughrey, Jason & Hennessy, Thia, 2016. "The Common Agricultural Policy and Farmers’ Off-farm Labour Supply," 160th Seminar, December 1-2, 2016, Warsaw, Poland 249796, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa160:249796
    DOI: 10.22004/ag.econ.249796
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    References listed on IDEAS

    as
    1. Ashok K. Mishra & Barry K. Goodwin, 1997. "Farm Income Variability and the Supply of Off-Farm Labor," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 880-887.
    2. Loughrey, Jason & Hennessy, Thia & Hanrahan, Kevin & Donnellan, Trevor & Raimondi, Valentina & Olper, Alessandro, 2013. "Determinants of Farm Labour Use: A Comparison between Ireland and Italy," Working papers 157119, Factor Markets, Centre for European Policy Studies.
    3. Joe Dewbre, 2006. "The Impact of Coupled and Decoupled Government Subsidies on Off-Farm Labor Participation of U.S. Farm Operators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 393-408.
    4. Maravalle, Alessandro & Claeys, Peter, 2012. "Boom–bust cycles and procyclical fiscal policy in a small open economy," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 735-754.
    5. Jason Loughrey & Thia Hennessy, 2016. "Farm income variability and off-farm employment in Ireland," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 76(3), pages 378-401, September.
    6. Robert Finger & Nadja El Benni, 2014. "Alternative Specifications of Reference Income Levels in the Income Stabilization Tool," Cooperative Management, in: Constantin Zopounidis & Nikos Kalogeras & Konstadinos Mattas & Gert Dijk & George Baourakis (ed.), Agricultural Cooperative Management and Policy, edition 127, chapter 0, pages 65-85, Springer.
    7. Donnellan, Trevor & Hennessy, Thia C., 2012. "The Labour Allocation Decisions of Farm Households: Defining a theoretical model," Working papers 137021, Factor Markets, Centre for European Policy Studies.
    8. Jason Loughrey & Fiona Thorne & Thia Hennessy, 2016. "A Microsimulation Model for Risk in Irish Tillage Farming," International Journal of Microsimulation, International Microsimulation Association, vol. 9(2), pages 41-76.
    9. John E. Lee, 1965. "Allocating Farm Resources between Farm and Nonfarm Uses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(1), pages 83-92.
    10. Thia C. Hennessy & Tahir Rehman, 2008. "Assessing the Impact of the ‘Decoupling’ Reform of the Common Agricultural Policy on Irish Farmers’ Off‐farm Labour Market Participation Decisions," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 41-56, February.
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