This research focuses on the estimation of labour supply equations for Dutch dairy farmers. Off-farm labour supply is characterised by the fact that only half of the farm households supply off-farm labour. This results in a sample selection estimation problem that has to be taken into account in estimation. In this research we use the panel data sample selection estimation method of Wooldridge (1995) to estimate the off-farm labour supply equation. Simulation results suggest that the decoupledness assumption of direct income paymenst in CAP reform might hold. At least there is a negligible effect through labour supply.


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