Assessing the Impact of the ‘Decoupling’ Reform of the Common Agricultural Policy on Irish Farmers’ Off‐farm Labour Market Participation Decisions |
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| Authors: | Thia C Hennessy Tahir Rehman |
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| Institution: | Thia Hennessy is a Senior Research Officer at the Rural Economy Research Centre, Teagasc, Galway, Ireland. E‐mail: for correspondence. Tahir Rehman is Professor of Farm Economics at the School of Agriculture, Policy and Development, University of Reading, UK. The authors would like to acknowledge the useful comments received from their colleagues, the Editor‐in‐Chief and the two anonymous referees on previous versions of this paper. |
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| Abstract: | This paper assesses the impact of the ‘decoupling’ reform of the Common Agricultural Policy on the labour allocation decisions of Irish farmers. The agricultural household decision‐making model provides the conceptual and theoretical framework to examine the interaction between government subsidies and farmers’ time allocation decisions. The relationship postulated is that ‘decoupling’ of agricultural support from production would probably result in a decline in the return to farm labour but it would also lead to an increase in household wealth. The effect of these factors on how farmers allocate their time is tested empirically using labour participation and labour supply models. The models developed are sufficiently general for application elsewhere. The main findings for the Irish situation are that the decoupling of direct payments is likely to increase the probability of farmers participating in the off‐farm employment market and that the amount of time allocated to off‐farm work will increase. |
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| Keywords: | Decoupling labour modelling probit sample selection bias |
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