EU policy reform simulation based on panel data estimation of on- and off-farm labour supply equations for Dutch dairy farmers

This research focuses on the estimation of labour supply equations for Dutch dairy farmers that are suitable for policy simulations. Data availability leads to the fact that we can not estimate structural labour supply equations. We show how to derive reduced form equations suitable for policy simulations. In this research we use the panel data sample selection estimation approach of Kyriazidou (1997) and Wooldridge (1995) to estimate the off-farm labour supply equation. The two lead to different estimation results and different simulation results based on these.