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Determinants of Farm Labour Use: A Comparison between Ireland and Italy

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  • Loughrey, Jason
  • Hennessy, Thia
  • Hanrahan, Kevin
  • Donnellan, Trevor
  • Raimondi, Valentina
  • Olper, Alessandro
Abstract
This 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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  • Loughrey, Jason & Hennessy, Thia & Hanrahan, Kevin & Donnellan, Trevor & Raimondi, Valentina & Olper, Alessandro, 2013. "Determinants of Farm Labour Use: A Comparison between Ireland and Italy," 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152331, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatr13:152331
    DOI: 10.22004/ag.econ.152331
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    1. 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.
    2. 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.
    3. Fujin Yi & Richard T. Gudaj & Valeria Arefieva & Renata Yanbykh & Svetlana Mishchuk & Tatiana A. Potenko & Jiayi Zhou & Ivan Zuenko, 2020. "Chinese Migrant Farmers in the Russian Far East: Impact on Rural Labor Markets," American Journal of Economics and Sociology, Wiley Blackwell, vol. 79(5), pages 1455-1482, November.
    4. Achoja Roland Onomu & Michael Aliber, 2021. "Factors Influencing Smallholder Farmers Mechanization Decisions in Nigeria: The Case of Tractor Use in the Fourth Industrial Revolution ERA," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 11(2), pages 199-209, June.
    5. David Sedik & Fujin Yi & Richard T. Gudaj, 2020. "Implications of Chinese Farmers in the Russian Far East," American Journal of Economics and Sociology, Wiley Blackwell, vol. 79(5), pages 1615-1622, November.

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    More about this item

    Keywords

    Agribusiness; Farm Management; International Relations/Trade; Labor and Human Capital;
    All these keywords.

    JEL classification:

    • 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

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