Farm succession at a crossroads: The interaction among farm characteristics, labour market conditions, and gender and birth order effects

Abstract

Farm succession is a relevant issue, as it is related to rural and youth migration, sustainability and the ageing of the agricultural sector. Understanding the factors behind the willingness of potential successors to take over the family business is crucial for farm continuity. We examine the factors affecting children's likelihood of carrying on the family business in a sample of 216 potential heirs of Italian horticultural farms. Using local labour market conditions (income gap and employment rate) and surrounding context variables (population density), we plug the farm labour migration/occupational choice theory into farm succession analysis. This approach allows us to treat child succession as the opposite of the choice to migrate out of the farm sector. While farm labour migration theory predicts linear negative effects of labour market/contextual variables on farm transfer, we find that the income gap, employment rates and population density exert both negative and positive effects on child succession, according to their intensity. The pro-succession effects we find suggest that, despite potential threats, the proximity to wealthy areas may represent an opportunity for farm continuity and thriving. We also examine explicitly the effect of child characteristics (gender and birth order), finding that male and first-born potential successors are more likely to take over the family farm, in accordance with results from previous firm succession studies. This finding suggests a persistence of traditional normative beliefs in the agricultural sector.