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The Common Agricultural Policy and The Farm Households’ Off-farm Labour Supply

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  • Loughrey, Jason
  • Hennessy, Thia

Abstract

The economic sustainability of farm households is frequently dependent on the availability of off- farm employment. This paper uses farm-level data to examine the impact of the Common Agricultural Policy (CAP) direct payment scheme, farm household characteristics and agricultural market conditions on farm households’ labour allocation decisions in Ireland. Among other things, the hypothesis that decoupled direct payments induce farm household members to allocate more time to off-farm employment is tested. 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 in the case of the farm operator. For married couples, the analysis finds a negative relationship between decoupled payments and the probability of both the farm operator and the spouse working in off-farm employment. Interestingly, decoupled payments have no significant relationship with the probability of the spouse only working in off-farm employment. This result corresponds to the finding of (El-Osta et al. 2008) and suggests that decoupled payments tend to play a very limited role in explaining the off-farm employment decisions of the spouse. At a time of increased volatility in farm incomes and uncertainty in agricultural policy, this analysis contributes to our understanding about the importance of off-farm labour in supporting farm household income. Furthermore, the analysis contributes to our understanding about the role of the farm spouse in contributing towards farm household income, the farm viability and the relationship between off-farm labour decisions and agricultural policy.

Suggested Citation

  • Loughrey, Jason & Hennessy, Thia, 2018. "The Common Agricultural Policy and The Farm Households’ Off-farm Labour Supply," 166th Seminar, August 30-31, 2018, Galway, West of Ireland 276230, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa166:276230
    DOI: 10.22004/ag.econ.276230
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    References listed on IDEAS

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    1. Hisham S. El-Osta & Ashok K. Mishra & Mitchell J. Morehart, 2008. "Off-Farm Labor Participation Decisions of Married Farm Couples and the Role of Government Payments," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(2), pages 311-332.
    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. J. G. Tokle & Wallace E. Huffman, 1991. "Local Economic Conditions and Wage Labor Decisions of Farm and Rural Nonfarm Couples," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 652-670.
    4. 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.
    5. Thia Hennessy & Mark O’ Brien, 2006. "The Contribution of Off-Farm Income to the Viability of Farming in Ireland," Working Papers 0613, Rural Economy and Development Programme,Teagasc.
    6. Daniel A. Sumner, 1982. "The Off-Farm Labor Supply of Farmers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(3), pages 499-509.
    7. Elias Giannakis & Sophia Efstratoglou & Artemis Antoniades, 2018. "Off-Farm Employment and Economic Crisis: Evidence from Cyprus," Agriculture, MDPI, vol. 8(3), pages 1-11, March.
    8. 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.
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    Cited by:

    1. Lillemets, Jüri & Fertő, Imre & Viira, Ants-Hannes, 2022. "The socioeconomic impacts of the CAP: Systematic literature review," Land Use Policy, Elsevier, vol. 114(C).

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    Keywords

    Agricultural and Food Policy; Environmental Economics and Policy;

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