The Impact of Coupled and Decoupled Government Subsidies on Off‐Farm Labor Participation of U.S. Farm Operators

Abstract

With the 1996 Farm Act, the United States introduced payments that were designed to be “decoupled.” Labor allocation choices are likely to be affected by receipt of payments, and income from off-farm jobs has been the major source of income for most farm households for sometime. This article examines whether the 1996 change has affected the off-farm labor participation of farm households. We conclude that the observed increase in off-farm participation of farm operators who received payments was not the result of the 1996 policy change. Government payments, whether coupled or decoupled, have a negative effect on off-farm labor participation. Copyright 2006, Oxford University Press.

Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the European Union

“…In the European Union the 2003 CAP reform replaced the previous subsidy system linked to the level of animal production and crop land use (so called coupled subsidies). Several studies, however, find that even decoupled subsidies may still affect farms' production decisions and factor allocation and thus may not be fully in line with the WTO requirements (Lagerkvist 2005;Ahearn, El-Osta, and Dewbre 2006;Goodwin and Mishra 2006;Vercammen 2007;Key and Roberts 2009;Whitaker 2009;Ciaian and Swinnen 2009;Bhaskar and Beghin 2010;Carpentier, Gohin, and Heinzel 2012). Our results confirm these findings: the decoupled SPS induces distortions in factor markets through altering farmers' land marginal decisions (reflected through their impact on land rental prices).…”

Off-farm employment and reasons for entering farming as determinants of production enterprise selection in US agriculture

“…In the Australian context, Lim-Applegate et al (2002) further examined off-farm employment by farmers. Government payments tend to decrease farmers' off-farm employment (Ahearn et al 2006;Dewbre and Mishra 2007). Likewise, researchers have examined impacts of government policy on farm production enterprise selection (e.g., Gillespie et al 1990).…”

What may determine off-farm income? A review

“…Mishra and Goodwin (1997) argued that the government farm payments lessened the need for the off-farm work by farm households in the USA. Ahearn et al (2006) underlined that after the introduction of the 1996 Farm Act in the USA introducing decoupled payments, the observed increase in the participation of farms -that received the decoupled paymentsin the non-farm labour market, was not the result of the policy changes from 1996. The government payments -decoupled or coupled -have a negative impact on the participation of farms in the non-farm labour market.…”