Do Caring Services Affect Off-Farm Work? Evidence from Italy

Abstract

Abstract The article investigates the determinants of the off-farm work decision in Italian farm households, highlighting the role of caring services. Assuming that the household simultaneously decides over the optimal allocation of time of each of its members, a multivariate probit model is used to estimate the off-farm participation equations and to control for possible correlation among them. Evidence of correlation between spouse and descendant equations are found. Results suggest that policy actions geared at encouraging the off-farm participation of farm household members ought to enhance the availability and accessibility of caring services and increase the level of education of household members. Keywords: Off-farm work participation, multivariate probit, household behavioural models, caring services (ProQuest: ... denotes formulae omitted.) Introduction Pluriactivity concerns a progressively greater share of farm households in all industrialized countries, and in fact off-farm incomes play an increasingly important role in the determination of farm household global income (OECD, 2003; Eurostat, 2002; Huffman and El Hosta, 1997). n the last decades participation has been enforced by the increasing participation of women in the labour market. More generally, the diffusion of capital intensive technological innovations has usually reduced the amount of labour required both in the farm and in the domestic production processes, therefore making labour time available for more productive off- farm activities. The decreasing need for on farm and domestic labour has operated in conjunction with demand pull factors. The increase in the educational level of the agricultural population1, and especially of females, has eased the outflow of this excess labour force out of the agricultural sector and its absorption in offfarm sectors. Farm households often use multiple job-holding by their members as a strategy to spread on different activities the income risk stemming from farm income variability and to improve both their income and lifestyle. A better understanding of off- farm participation decisions could be useful for further implementation of Common Agricultural Policy reform. Two of the challenges addressed by the rural development policy are in fact the presence in rural areas of a) income lower than the average, mainly due to an ageing working population and great dependency on the primary sector, and b) higher unemployment relative to the rest of the territory. To know what variables affect off- farm participation decisions can, for example, allow the policymaker to select the best policy measures to increase the pluriactivity of farm households in order to increase global household income. In addition, some studies (e.g. Weiss, 1997 and 1999) have found that off- farm work has a positive influence on the exit probability of farmers from agriculture. As a consequence, a better knowledge of the rules that regulate off- farm participation can help in understanding the speed of structural adjustment in farm sector. Studies concerning off-farm work have mainly concentrated on direct factors, such as personal, socio-demographic and farm characteristics affecting off- farm participation, controlling for possible correlation in the decisions of household members. However, studies in other fields of economic research have argued that indirect factors may contribute to explain participation decisions of household members. In particular, the presence of household members needing care (i.e. children, disabled and not self-sufficient elderly persons) appears to play an important role in labour supply decisions within the household (see Anderson and Levine, 1999; Apps and Rees, 2004; Del Boca and Vuri, 2006; Parodi and Sciulli, 2006). In fact, if publicly provided caring services are insufficient, care has to be provided by the family, in the form either of costly external helpers, or of relatives. …