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Abstract

The process of change in the EU Common Agricultural Policy (CAP) from trade and market distorting measures to more neutral interventions has been long, but in this process the 2003 reform (the so-called Fischler reform) has been the most important step, abolishing most coupled support and introducing the fully decoupled Single Farm Payment Scheme (SFP). In this paper, we try to assess its effects on off-farm labour participation of farmers, an issue also relevant in terms of rural development effects. We estimate a random effects probit model of operators’ off-farm labour participation from a panel of Italian COP farms drawn from the FADN, thus controlling for unobserved heterogeneity. The results suggest that the effects of the reform on off-farm labour participation, if any, are weak. No variable directly related to the CAP reform is significant. These results are not in contrasts with the theoretical considerations, since the reform entails both wealth and substitution effects that tend to offset each other.

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