Leisure and farmers’ welfare in changing conditions

Authors

• Jukka Kola Department of Economics and Management, P.O. Box 27, FIN-00014 University of Helsinki, Finland
• Sanna Sihvola Department of Economics and Management, P.O. Box 27, FIN-00014 University of Helsinki, Finland

DOI: https://doi.org/10.23986/afsci.72683

Abstract

This paper examines the background for leisure-labour decisions in agriculture and evaluates welfare effects of a shift in farmers’ relief services from a state-led subsidised system to a market mechanism. Leisure provided by relief services in agriculture contributes to well-being, but the leisure-labour choice also influences the revenue. Besides conventional economic and demographic factors, we emphasize the importance of special biological bindings and continuity, as well as risk and uncertainty affecting farmers’ time allocation in agricultural production. We consider structural development as an aggregate factor to explain the demand for farmers’ relief services. In Finland the organisation of the services is more centralized than in the other Nordic countries or the European Union. If government subsidies for relief services were removed and a market mechanism with free price formation adopted, direct government savings would be more than enough to compensate for substantial losses to farmers. Moreover, market forces could produce economic efficiency and local flexibility of a higher degree. State subsidization may still be needed to some extent in changing conditions in order to enable the relief services to develop and serve as a support system of a social, de-coupled, and less distorting nature.