Intertemporal analysis of employment decisions on agricultural holdings in Slovenia

Abstract

AbstractThe article attempts to quantify determinants influencing the dynamics of employment decisions on agricultural holdings in Slovenia and to test specific aspects of labor reallocation during the transition period by the application of an agricultural household model. Through the use of a 1991–2000 longitudinal data set for 22,055 farm households, quantitative analysis of intertemporal employment decisions by farm holders is carried out using probit techniques. The determinants tested relate to the personal characteristics of farm holders (gender, age, education level, and potential off‐farm income), household characteristics (size, structure), characteristics of the agricultural holding (economic size, labor intensity), and local labor market conditions. The model results generally confirm existing empirical evidence on asymmetrical and irreversible participation of holders on the labor market. Despite intensive restructuring of agriculture and profound changes in the nonfarm labor market in the analyzed period, labor supply of farm holders remains rigid. The mobility of labor supply is lower than expected, which can be attributed to the importance of structural problems constraining intersectoral mobility. Low labor mobility reduces the efficiency of labor allocation on agricultural holdings in Slovenia. Elements of this problem emerge on both supply (e.g., low level of educational and professional attainment of reference persons) and demand sides of the labor market (e.g., unfavorable local labor market conditions). A marked tendency toward maintaining the same employment status is more distinct in the case of holders employed on‐farm only.