Off-farm labour decision of Canadian farm operators: Urbanization effects and rural labour market linkages

Understanding the factors affecting off-farm labour decisions of census-farm operators has significant implications for rural development and farm income support policy. We examine the off-farm labour decisions of Canadian farm operators using micro-level data from the 2001 Census of Agriculture combined with community level data from the 2001 Census of Population. While confirming some of the findings of previous research with respect to the effects of human capital and farm characteristics on off-farm work participation, this study shows the differential impact of those variables for operators of smaller and larger holdings. Family, community and regional characteristics appear more relevant in determining the joint decision to work off-farm and operate a smaller holding, compared to the decision to work off-farm and operate a larger farm. Results suggest that, once other factors are accounted for, proximity to urban centres does not have a positive effect on the joint decisions to participate in off-farm work and to operate a holding. This joint decision, in fact, is more related to the dynamics of the local labour market. A major implication of these findings is that while urban centers might represent an engine of growth for overall rural income through employment opportunities for the non-farm workforce, the non-farm income of farm operators is more likely to be affected by policy initiatives that address directly the dynamics of labour markets in the community where the operator lives.