Off-farm labour participation of Italian farmers, state dependence and the CAP reform

We analyse the determinants of off-farm labour participation of farmers. For estimation, we use different dynamic models, accounting for both heterogeneity and state dependence, as well as for the initial conditions. Our results suggest that, when keeping into account all these features, the present work state is almost totally explained by the previous state and by idiosyncratic characteristics, which implies a strong persistence. Variables concerning personal characteristics are not found to be significant in the dynamic setting. Finally, the variables related to the reform of the Common Agricultural Policy have little or no statistically significant effect.