Evaluating the effect of farmers participation in on-farm diversification activities on farm employment in Korea

Abstract

The 6th industrialization of agriculture is the strategy of integrating the 1st, 2nd and 3rd industries in an agricultural sector. In 2013, the Republic of Korea implemented the Sixth Industrialization Policy with the aim of revitalizing the rural economy, increasing the added-value of the agricultural sector and boosting rural and farm employment. At the farm level, the policy supports the development of integrated farming businesses operating on-farm diversification activities of the 2nd and/or 3rd industries (direct sales, processing, farm restaurant and farm tourism) linked to the agricultural primary production. In this paper we intend to reduce the literature gap and investigate the effect of the participation of farming households in the sixth industrialization on-farm diversification activities on their probability to hire an employee. To do so, we use the Propensity Score Matching (PSM) technique. We estimate the average treatment effect on the treated including all types of farming business at first and then run the analysis by farming type. Moreover, we measure the treatment effects for different employment durations to investigate the participation impact on the length of employment. Our results suggest that participation in on-farm diversification activities increases the probability of farm employment in the integrated farms despite the fact that the intensity of the increase and its significance vary according to the farming type. The impact on specific employment durations also varies with the type of farm.