B.1.4 presentation loughrey-hennessy_hanran_donnellan_raimondi_olper_seville2013
-
Upload
jason-loughrey -
Category
Education
-
view
132 -
download
0
description
Transcript of B.1.4 presentation loughrey-hennessy_hanran_donnellan_raimondi_olper_seville2013
JASON LOUGHREY *, THIA HENNESSY *, KEVIN HANRAHAN *, TREVOR DONNELLAN *
VALENTINA RAIMONDI ** AND ALESSANDRO OLPER **
* R U R A L E C O N O M Y A N D D E V E L O P M E N T P R O G R A M M E , T E A G A S C
* * D E P A R T M E N T O F E C O N O M I C S , M A N A G E M E N T A N D Q U A N T I T A T I V E M E T H O D S U N I V E R S I T Y O F M I L A N O
2 013 IATR C SYM POSIU M F ACTOR M AR K ETS SESSION
TU ESD AY JU NE 4 TH 2 013
Determinants of Farm Labour Use: A Comparison between
Ireland and Italy 1
Background
Off-Farm Labour Participation more common among Irish farm operators at 36.3% compared to 23% for Italian farm operators (average from 2002 to 2009) Farmers achieve higher
income and consumption Form of risk
management Recent studies have
focused on contribution of government payments
In the CAP decoupling of 2005, both countries chose the historical model over the regional model
Entitlements based on reference period from 2000 to 2002
Limited change to the distribution of farm income
Farmers required to maintain the land ‘in good agricultural and environmental condition’ and land under permanent pasture
2
Ireland Italy
Teagasc National Farm Survey
Average sample size of 1,184 farms per year (2002-2009)
Unbalanced panel – rate of attrition is very low over eight year period
Provide Irish farm income data to the EU Commission in Brussels (FADN)
Weights based upon system of farming and size of the farm
Provides micro-data on off-farm employment data for the farm holder and spouse where relevant
The Farm Business Survey (REA) carried out by the Italian Institute of Statistics (ISTAT)
Average sample of 3,573 farms per year (2002-2009)
Balanced panel - only farms surveyed for the entire period
Annual sample of agricultural holdings representative of Italian agriculture, stratified by regions, farm types and economic size of holdings.
Database includes household’s composition variables and off-farm employment variables.
Datasets 3
SUMMARY STATISTICS
4
2004 2007
-10 10 30 50 70
Lowest
2
3
4
Highest
Share of Total Farm Family Income
Share of Total Pillar 1 Direct Payments
-10 10 30 50 70
Lowest
2
3
4
Highest
Share of Total Family Farm Income
Share of Total Pillar 1 Direct Payments
Italy - Distribution of Farm Income and Pillar 1 Direct Payments by Income Quintile Based on FADN Data (Severini and Tantori, 2012)
5
2004 2007
-10 10 30 50 70
Lowest
2
3
4
Highest
Share of Total Family Farm Income
Share of Total Pillar 1 Funds
-10 10 30 50 70
Lowest
2
3
4
Highest
Share of Total Family Farm Income
Share of Total Pillar 1 Funds
Ireland - Distribution of Farm Income and Pillar 1 Direct Payments by Income Quintile (Teagasc National Farm Survey)
6
2004 2007
-10 10 30 50 70
Lowest
2
3
4
Highest
Off Farm Participation (Holder %)
Share of Total Family Farm Income
Share of Total Pillar 1 Funds
-10 10 30 50 70
Lowest
2
3
4
Highest
Off Farm Participation (Holder %)
Share of Total Family Farm Income
Share of Total Pillar 1 Funds
Ireland - Distribution of Farm Income and Pillar 1 Direct Payments by Income Quintile (Teagasc National Farm Survey)
7
Outcome Variables 8
ITALY IRELAND
Dependent Variables Off-Farm
Employed
Sub-Sample
Full-
Sample
Off-Farm
Employed
Sub-Sample
Full-
Sample
Off Farm Job (Head) 23.0 36.3
Off Farm Hours Per
Annum 467 113 1572 571
9
ITALY IRELAND
Independent Variables Off-Farm Employed Full-Sample Off-Farm Employed Full-Sample
Age 53.40 55.78 48.98 54.35
Sex (= 1 male; 2 female) 1.29 1.34 1.03 1.05
Specialist Dairy 0.0927 0.1388 0.0540 0.1571
UAA (ha) 15.11 24.18 27.47 36.72
Spouse (= 1 if work off-farm ) 0.1146 0.0656 0.4190 0.3167
Married (= 1 if married) 0.3709 0.4114 0.7449 0.6730
Number of young in the family farm 0.0801 0.0465 0.8318 0.6278
Number of family members living in
the farm
1.8457 1.9466 3.6214 3.2889
Number of family members working
in the farm
0.2409 0.3482 N/A N/A
Hired (= 1 if presence of hired
workers)
0.2099 0.2617 0.1097 0.1827
Number of bovine per UAA 0.7564 0.8798 1.1429 1.3093
Decoupled payments 2,529 5,441 7,237 9,059
Coupled Income 2,517 3,936 2,636 7,780
Other subsidies (investment aids,
organic payments …)
442 630 2,676 2,764
Off Farm Employment Rates in Ireland 2002-2009 Teagasc National Farm Survey
10
20
25
30
35
40
45
50
55
60
2002 2003 2004 2005 2006 2007 2008 2009
% of Operators with anoff-farm employment
% of farms where spousehas an off-farmemployment
% of farms whereoperators and/or spousehas off-farmemployment
Off Farm and Coupled Farm Wage Rates in Ireland
11
-5
0
5
10
15
20
25
2002 2003 2004 2005 2006 2007 2008 2009
Average On-Farm WageRate
Average ConstructionWage Rate (All ManualEmployees)
National MinimumWage
Average Industry WageRate
METHODOLOGY
12
Neo-Classical Framework
Households behave to maximise their utility subject to budget and time constraints Becker (1965) A theory of the Allocation of Time
Drawed upon earlier work of Schultz (1960) on education decisions
The time intensity of consumption goods “Everyone would agree that even dining take time, just as schooling does, time that could have been used productively”
Lee (1965) Allocating Farm Resources between Farm and Nonfarm uses Extend the labour-leisure model for the special case of farm
operator households Heckman (1979) Sample Selection Bias as a Specification Error
Provided a two-step method that can potentially correct for sample selection bias
13
Neo-Classical Applied Literature 14
Sumner (1982) - incorporated sample selectivity bias into off-farm labour supply modelling
Ahearn, El-Osta and Dewbre
(2006) - Negative effect of government payments greater in 1996 than 1999
Attributed this to the size of the payments rather than the policy mix of payments
A $10,000 increase in actual payments reduces the likelihood of farm operator working off-farm by 9.8% in 1996 and 4.63% in 1999
El-Osta, Mishra, Morehart (2008) Multinomial logit model with
four possible strategies for husband and wife
$10,000 increase in expected payments reduces likelihood of both husband and wife working off-farm by 8.6%
Corsi and Salvioini (2012) Impact of 2005 CAP reform on
off-farm labour participation among 437 cereal, oilseed and protein crop farmers in Italy.
The single farm payment is found however not to be a significant driver of participation
Decoupling - Relative Wage Effect
Coupled Farm Wage
Relative Attractiveness of Off Farm Work
Off-Farm Labour Supply
15
Decoupling – Wealth Effect
Non-Labour Income
Leisure is a Normal Good
Therefore Demand for Leisure
Off-Farm Labour
16
RESULTS
17
Probit Results (Random Effects)
DEPENDENT
VARIABLE IRELAND ITALY
Age 0.355*** 0.347*** 0.348*** 0.061*** 0.060*** 0.054***
Age Squared -0.005*** -0.005*** -0.005*** -0.001*** -0.001*** -0.001***
Sex -0.255 -0.276 -0.269 -0.140*** -0.143*** -0.151***
Specialist Dairy -1.389*** -1.347*** -1.379*** -0.478*** -0.481*** -0.548***
UAA (ha) -0.006** -0.005** -0.006** -0.004*** -0.005*** -0.003***
Spouse work off-farm 0.0309 0.0413 0.0369 1.486*** 1.487*** 1.482***
Married 0.657*** 0.676*** 0.664*** -0.696*** -0.698*** -0.703***
Number of young -0.223*** -0.231*** -0.228*** -0.029 -0.031 -0.032
Household Size 0.198*** 0.199*** 0.198*** 0.117*** 0.118*** 0.114**
No. Family Members
working on Farm
-0.220*** -0.222*** -0.219***
Hired Workers (1,0) -0.026 -0.028 -0.023 -0.200*** -0.204*** -0.196***
Number of bovine Per
UAA
-0.027*** -0.027*** -0.027*** -0.014** -0.014** -0.015*
Decoupled Pay
(in €10,000s)
-0.088 -0.003**
Coupled Income
(in €10,000s)
-0.030 0.001
Other subsidies -0.008 -0.001
_cons -7.410*** -7.243*** -7.263*** -1.655*** -2.517*** -2.123***
18
Hours Equation Results (Fixed Effects)
DEPENDENT VARIABLE IRELAND
ITALY
Age 0.877*** 0.895*** 0.941*** 0.29*** 0.30*** 0.29***
Agesq -0.0132*** -0.0134*** -0.0140*** -0.00408*** -0.00417*** -0.00411***
Specialist Dairy -4.257*** -4.150*** -4.500*** 0.39 0.32 0.24
UAA (ha) -0.0203* -0.0180* -0.0226** 0.01 0.01 0.02
Spouse working off-farm -0.703*** -0.674*** -0.691*** 4.42*** 4.57*** 4.54***
Married 0.483 0.545 0.612 -1.86** -1.94** -1.96**
Number of young -0.364* -0.388* -0.412** -0.45* -0.46* -0.49*
No. family members
living in the farm
0.0143 0.0318 0.0463 0.51** 0.53** 0.56***
No. family members
working in the farm
-0.57* -0.60* -0.61**
Hired Workers (1,0) -0.217 -0.244 -0.214 0.15 0.12 0.12
Number of bovine on
UAA
-0.0571** -0.0597** -0.0636*** -0.08*** -0.09*** -0.07***
Decoupled pay
(x €10,000)
-0.0468 -0.17***
Coupled Income
(x €10,000)
-0.172*** 0.17***
Other subsidies -0.00333 0.13
Mills ratio 1.948** 2.050** 2.177** 1.13 1.26 1.23
_cons 2.791 2.396 1.389 -1.70 -2.27 -2.09
19
Ireland - Coupled Farm Wage Rate by System Pre and Post Decoupling
-5 0 5 10 15 20
Dairying
Dairying and Other
Cattle
Cattle and Other
Mainly Sheep
Tillage
All Farms
2007
2004
20
Summary 21
Decoupling has a significant negative effect on participation in Italy (insignificant in Ireland)
Decoupling has a significant negative effect on the supply of labour hours in both countries
Coupled Income has bigger negative impact than Decoupled Payments on off-farm labour supply in Ireland
Unusual result for Italy in that coupled income has positive association with off-farm labour supply
Policy 22
Job-Specific Human Capital limits options Non-Pecuniary benefits of farming Relatively low income targets and strength of the wealth effects Loss of work experience outside of the farm inhibits re-entry to off-farm
employment In the case of Ireland, taking up an off-farm job is usually a very big
commitment Perhaps difficult to get employment with suitable hours combined with
inertia Dairy farmers an unlikely target group for off-farm employment except
those exiting sector Differences between countries in terms of farm type characteristics and
labour market conditions and at different points of the income distribution Does Italy have greater scope for higher off-farm employment given the
existing lower level? Participation under different distribution of direct payments?