Rural Policies and Employment

TransAtlantic Experiences

Sophia M Davidova, Kenneth J Thomson;Ashok K Mishra

• Publisher: WSPC (EUROPE)
• Year: 2019
• ISBN:
  9781786347107
• Topic: Social Sciences
• Subtopic: Rural Sociology
• Index: Social Sciences

A unique title comparing rural policies and employment in the two most developed parts of the world — the EU and USA. While both regions are concerned for their vast rural areas, each adopts a strikingly different approach to create and maintain employment there, making rural space attractive to businesses and residents.

This book focuses on a major issue of socioeconomic and policy concern, i.e. whether jobs and incomes can be protected or created in rural areas, where often agriculture no longer provides a large and secure basis for employment. Within a 'paired' chapter structure covering both the European Union and the United States of America, it deals with several themes of interest including farm policies, labor entry and exit, and rural and household enterprise diversification. Specific 'special studies' also analyze recent developments within countries or regions.

Contents:

• About the Editors
• About the Contributors
• List of Abbreviations
• List of Figures
• List of Tables
• Introduction and Key Conclusions (Sophia Davidova, Ashok Mishra and Kenneth J Thomson)
• General Policy Context:
  • EU Policies and Rural Employment (Berkeley Hill)
  • US Policies and Rural Employment (David Blandford)
• Trends in Rural Employment:
  • Rural Employment Trends in the EU (David Harvey)
  • Special Study: The Productivity of Family and Hired Labour in EU Arable Farming (Mathias Kloss and Martin Petrick)
  • Entrepreneurship in Rural Employment in the US (Tessa Conroy, Steven Deller and Matthew Kures)
• Farm Policies and Rural Jobs:
  • CAP and Rural Jobs: Analysis of Studies (Mauro Vigani, John Powell and Janet Dwyer)
  • Special Study: The Importance of Territorial Diversity: Employment Effects of the CAP's Pillars 1 and 2 in Rural Areas in Italy (Francesco Mantino)
  • Employment Effects of CAP Payments in the UK Non-Farm Economy (Marian Rizov, Sophia M Davidova and Alastair Bailey)
  • US Farm Bill Policies: Impacts on Rural Economic Development (Mary Ahearn)
  • Special Study: Public Policy, Lending and Social Equity Issues for Rural America (Charles Dodson)
• Entry, Exit of Farmers and Migration:
  • Entry and Exit of Farmers Across the EU (Davide Viaggi)
  • US Trends in Farm and Off-Farm Rural Employment (J Michael Harris and Ashok K Mishra)
  • Wage, Employment and Demographic Trends for Hired Farmworkers in the US (Thomas Hertz)
• Agri-food Chain:
  • Value Added and Employment Growth in EU Primary Agriculture and Food Processing (Trevor Donnellan and Kevin Hanrahan)
  • EU Food Quality Policy and Rural Employment (L Dries, J Peerlings and L van de Pol)
  • Post-Farmgate Employment in the US (David Swenson)
• Diversification:
  • Rural Diversification and Job Creation in the EU (Kenneth J Thomson)
  • Special Study: The Role of CAP Rural Development Programs in Creating Rural Jobs in Poland (Katarzyna Zawalińska)
  • The Role of Agriculture and Farm Household Diversification in the US Rural Economy (Thomas G Johnson)
• Rural Recreation:
  • Rural Tourism and Recreation in the EU (Bill Slee)
  • Agri-tourism and Rural Outdoor Recreation in the US: A Framework for Understanding Economic and Employment Dynamics (Dawn Thilmany, Rebecca Hill, Michelle Haefele, Anders van Sandt, Catherine Cullinane Thomas, Martha Sullins and Sarah A Low)
  • Special Study: Agri-tourism as a Strategy for Farm Economic Development in New Jersey, USA: Opportunities and Cautions for Farmers (Brian J Schilling, Michelle Infante-Casella, Stephen J Komar and William J Bamka)
• Index

Readership: A general audience interested in agricultural, economics and rural affairs, with little mathematical content or abstruse economic arguments. Rural Areas;Rural Development;Agriculture;Employment;Labor;Jobs;Common Agricultural Policy;European Union;United States00

Chapter 1

Introduction and Key Conclusions

Sophia M. Davidova^∗,§, Ashok K. Mishra^†,¶
and Kenneth J. Thomson^‡,||

^∗School of Economics, University of Kent, Canterbury, UK
^†Morrison School of Agribusiness, W. P. Carey School of Business,
Arizona State University, USA
^‡University of Aberdeen and James Hutton Institute, UK
^§[email protected]
^¶[email protected]
^||[email protected]

1.1Introduction

Rural areas are a vital part of the geography and economy of almost every country. They are places of residence, work and recreation for many or even most of the national population, and very often the location of long-standing cultural traditions. One of their most important features is that agricultural land, almost in its totality, is managed in rural space. However, this does not mean that the terms “rural” and “agricultural” are synonymous, particularly in developed countries, where rural areas have a complex economic structure. Apart from agriculture and forestry, these rural areas contain many non-agricultural activities, such as manufacturing and services, in particular recreation and tourism, which have increased greatly in recent years.

To focus a study on rural areas is a complex task due to their heterogeneity in terms of local biophysical, economic, demographic and cultural characteristics. It is no less complex to study rural policies, which often derive from a range of supranational, national, regional and local competences. In the European Union (EU), the measures of the Common Agricultural Policy (CAP) combine with an array of national and regional policies, specific to each EU Member State (MS), both for agriculture as an economic sector and rural development. In the United States (US), rural areas are affected by federal, state and local policies, and, compared to the EU, there is much less policy emphasis on rural as opposed to urban. Major policy instruments, e.g. tax and public welfare, are not targeted specifically at rural areas, although they may have different outcomes there due to the structural, economic and demographic characteristics of rural space. It is even a more complex task to compare policies and their outcome for rural labor market in the EU and USA — the main subject of this book.

Although rural policy variations between the EU and the USA may, on many occasions, hamper direct comparison, employment in view of rural job creation and/or job retention is a commonly stated or implicit policy objective in both the EU and the USA. The issue of the availability of local jobs is exacerbated in more remote rural areas where commuting to towns and cities is difficult, and thus the rural population is not able to exploit the growth of urban economies to find employment.

The relationship between rural policies and employment is a multifaceted one. For this reason, the book is divided in several sections dealing with different aspects of this relationship in both the EU and the USA, along with some special studies based on targeted geographical analyses. In sequence, the book covers the following: the general policy context; rural trends; farm policies; agricultural entry and exit; post-farm agri-food processing; household and rural diversification; and rural recreation. Each section and the chapter is focused on the link to the number and nature of jobs in the relevant sectors.

Although the range of topics included has been carefully selected, the book does not pretend to be comprehensive. Various aspects of relevance are missing, e.g. health and safety in agricultural and rural work, gross job number gains and losses, and the balance and status of rural jobs by gender; a few topics of these are discussed briefly in Section 1.3. The importance of these issues is not underestimated, but a more concise book was thought to be more attractive to the readership.

1.2Main Issues

The lack of a unified definition of what constitutes “rural” leads to different estimates of the share of rural areas in the economy of both the EU and the USA, and of their populations. In the EU, the problem is compounded by the change in 2010 from the use of Organization for Economic Cooperation and Development (OECD) criterion of population density to a system based on a 1-km² grid, i.e. “rural” cells are those with fewer than 300 inhabitants and outside contiguous grid cells of at least 5,000 inhabitants [Eurostat, 2017]. In the USA, more than 20 definitions of rurality are used by federal agencies. For example, the United States Department of Agriculture (USDA) defines rurality as any place with fewer than 50,000 inhabitants and not located adjacent to an urban area. Similarly, the Census Bureau defines rurality as any place outside a town, city or “urban cluster” with more than 2,500 residents. Finally, the Department of Veterans Affairs defines rurality as areas with a population density between seven and 1,000 people per square mile. Data are usually differentiated according to metropolitan (metro) urban areas and non-metro (rural areas) on the basis of county units.

In the EU, apart from the CAP and its European Agricultural Fund for Rural Development (EAFRD), and national and regional policies, there are four Structural and Investment Funds (SIFs) with direct implications for rural employment: the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund, and the European Maritime and Fisheries Fund (EMFF). Although in popular perception, the CAP is targeted at rural development via a wide range of measures, including those for farm modernization, knowledge transfer and innovation, agri-environment, and social inclusion, the SIFs budgets are larger and more focused on employment.

In the USA, rural policies aimed at employment mainly promote infrastructure development, but, as mentioned previously, it is not common to have different policies for rural and urban space. Still, 10 states have taken actions to promote development of rural areas, e.g. providing information on rural issues and making recommendations at the state level for rural policy. But the most targeted at rural areas are federal rural development programs, mainly the so-called “discretionary programs” with a budget annually approved by the Congress. Some of these programs are quite different from the EU rural development measures and focus on assistance for utility services, housing and public safety.

At the core of the book is the rural labor market, which operates alongside those for land (natural resources) and capital (physical or financial resources). Each of these markets can be affected by policy intervention, with effects on the amount and types of labor supplied to, or demanded by, farming and other rural sectors. The supply of labor depends on the size and nature (e.g. age, sex, skills) of the available “economically active” population, while labor is sought by employers by offering wages or salaries, and sometimes also housing, etc., to potential workers. The resultant market often has specific features of local oligopoly (few sellers) or oligopsony (few buyers), imperfect information about possible jobs or wage levels, and policy intervention, e.g. hiring and safety regulations. In rural areas, some of these features are emphasized, while others are less clear-cut. Much farming is undertaken as a family business — a type of enterprise often favored by fiscal and other policies — in which personal relationships may be as important as financial considerations, especially when household income is shared between spouses, their parents or children, and perhaps other relations, and where the farm itself is an asset whose management and future are of concern to all.

Again, the physical location of rural businesses, often with few nearby alternatives on either side of the market relationship, affects how labor is acquired and retained. While better physical and electronic communications — mostly arising from direct or indirect policy activity — have reduced the isolation of rural families and communities, there are still relatively few easy opportunities for employers to acquire additional or replacement workers when desired, or for workers to look for and try out new positions.

In both the EU and the USA, although agriculture is important for rural jobs (mainly through self-employment), it is not the principal employer. In the EU, rural economies do not heavily rely on the primary sector, i.e. agriculture, forestry, fishing and mining, although it is relatively more important in a few of the EU New Member States (NMSs), in fact the poorest ones, Bulgaria and Romania. Instead, it is the tertiary (service) sector that is crucial for rural employment. For example, the primary sector accounts for 13.5% of rural employment, secondary for 26.8% and tertiary 59.7%. The importance of tertiary sector is even larger in the “old” MSs — the EU-15. The Great Recession of 2008 onwards hit rural employment more strongly than the urban one, but by 2016, the average employment rate was similar across all types of regions, with the usual big variations across the MSs.

Employment in rural USA also does not rely mainly on farming, but depends crucially on manufacturing and public services. This structure of employment led to substantial job losses following deep cuts in government spending during the Great Recession and subsequently to a lower rate of employment recovery in rural areas in comparison to urban areas. Until 2016, job losses were not fully recovered, although the selfemployed sector has been somewhat more dynamic. This may be a sign of a stagnating rural labor market as people have been discouraged to look for wage or salaried jobs.

The fact that both in the USA and the EU rural jobs are not predominantly in agriculture clearly emphasizes the importance of non-farm job creation, which in turn depends on the degree of economic diversification. It should be borne in mind that such diversification develops at different levels: at the farm level when farm assets are used for activities outside farming, e.g. rural tourism or renewable energy, and at the level of rural economy, where economic activity and employment in rural space are spread amongst more sectors. Apart from creating non-farm jobs, rural diversification increases the resilience of the economy to negative supply or demand shocks in a particular sector.

In the EU, farm and rural diversification has been an explicit policy objective, and diversification into non-agricultural activities has been supported by a measure in Pillar 2 of the CAP. A special study in this book on Poland indicates that, for the period 2007–2013, 5.4% of rural development funds was spent on diversification into non-agricultural activities and on support for the establishment and development of micro-enterprises. The latter measure generated 26.2 thousand rural jobs at a public expenditure cost of over €23,000 per job. In the USA, the rising importance of off-farm income to smooth total household income of farmers and to provide benefits to the local communities is driven by private initiatives. One can conclude that US agricultural and rural policy is highly motivated by the economic conditions in the farm sector rather than conditions — rural and non-rural — more generally.

1.3Special Issues

1.3.1Health and safety in farm and rural work

Agriculture is widely known as an unsafe and sometimes unhealthy sector of employment, with high rates of illnesses, accidents and deaths, although other rural occupations, such as forestry and small-scale mining, are even more dangerous. On the other hand, outdoor activity is widely considered — especially by higher-income groups — as healthy, with beneficial effects on “wellness”, and farming as a satisfying “way of life”, with important socio-economic roles. A mixture of physical and mental health issues, coupled with remote locations and often lone working, produce a complex picture in which government action is sometimes seen as desirable in trying to reduce the incidence of harmful events, as well as promoting more general participation in healthy activities.

About 500 people per year die while working in EU agriculture, forestry and fishing, and there are about 150,000 non-fatal accidents at such work, as well as work-related physical and mental health problems. Numbers in the USA — though the recording system is different and incomplete — are similar [NIOSH, 2018]. Accident and illness incidence rates are also generally higher than in other sectors. Moreover, on-farm accidents happen to a very wide range of ages, from the very young to the relatively old. There is no clear pattern of incidence rates across EU MSs, for a number of possible reasons, such as different systems of official reporting or farming (e.g. crops vs. livestock, large vs. small), and different national health patterns. Policy action can take a number of forms, but must take into account changes in farming technology, and the need to reach a wide range of potential casualties.

Occupational health and safety is a field well recognized in legislative, institutional and professional terms, with nearly all countries having specialized arrangements for defining, enforcing and monitoring dangers to workers in most sectors of the economy. However, agriculture sometimes has specialized legal and organizational arrangements, and in any case farming conditions often include a number of factors, such as self-employment, family-working, remoteness, and multiple and season-varying work tasks, which make it harder to apply policy to the industry.

1.3.2Employment and gender

There is a considerable, though sometimes geographically patchy, literature on gender in developed-country farm occupations, though much less on gender aspects of rural employment generally. However, with the rising importance of gender equality, policy interest in this area, though still limited, has become noticeable [European Commission, 2012, 2016; European Parliament, 2016; USDA, undated]. In both the EU and the USA, about 30% of farm holders are registered as female, but this proportion almost certainly overestimates their decision-making influence on land-based production and economic activity, or (even more so) their role in policymaking. This is not to underplay women’s contribution to farming — and probably other rural occupations — in terms of labor time, especially when “invisible work” such as book-keeping and office management is taken into account.

Policy intervention to increase and enhance female employment can take a number of forms, both to support women’s initiatives and skills, and to remove barriers — both formal and cultural — to their fuller participation. In the former category, specialist training courses for women, or on topics likely to interest women, or at least extra encouragement to women joining standard courses can be provided, taking into account likely problems in attendance during times of family responsibilities. Amongst the latter, a major factor is the tendency — sometimes reinforced by inheritance law — to pass on farms (especially large farms) to sons rather than daughters [Shortall, 2010].

As a case study, a current initiative in one part of Europe [Scottish Government, 2018] has revealed a number of barriers to women taking a more important economic role in rural life. A taskforce, involving farmers, academics, government officials and others, has been set up to tackle inequality in Scottish agriculture and to ensure that the potential of women in farming is realized. It will seek ways to implement a set of 27 recommendations based on research. These involve training in skills and safety, rebalancing financial assistance, changing farm succession practices, and institutional reform — the latter focusing on representation within farmer unions and similar organizations, which are crucial to policymaking...