Impacts of the 2003 cap reform on pluriactivity and on labour markets

In this paper the impacts of 2003 CAP reform on the labour market, particularly on pluri-active farms and waged labour, are theoretically analysed as a combination of income payment and price decrease. Theoretical expectations regarding these aspects depend, among others, on the relationship between leisure and farm work and the separability of production and labour allocation decisions. In general, there are no a priori expectations on their direction. Also the overall effect of the CAP reform on waged labour cannot be a priori determined as it depends on whether the decrease in total farm work (depending on the substitution effect between family and waged labour) is larger or smaller than the decrease in the farmer’s on-farm work (depending on wealth effects of the reform).