Does family farming reduce rural unemployment?

Abstract

Abstract This article investigates the causal relationship between family farming and rural labour markets. To this end, we combine farm accountancy data and public labour market statistics at the district level (NUTS-3) for the years 2008–2013. While cross-sectional regressions reveal a strong and robust negative correlation between the share of family farm labour and unemployment rate in a region, fixed-effects panel data regressions suggest this is not causal. Instead, we find evidence that cultural differences in work ethic spuriously connect family farming with unemployment. Thus, supporting family farming to fight rural unemployment is not an effective strategy in Germany.