Does agriculture matter? Revisiting the farm income problem in Italy

The prevalence of low income among agricultural households has long been known as the “farm problem”. Although revisited by a number of recent studies the farm problem is still one of the rationales of agricultural policies. We apply the Oaxaca decomposition to investigate how differences in well-being between agricultural and non agricultural households in Italy are affected by the structural characteristics of households rather than specificities of the agricultural sector. Findings indicate that the latter component accounts only for one third of the difference in well-being. Therefore, tackling the adverse mix of characteristics that negatively impact well-being in agricultural households would seem to require the implementation of targeted – but not necessarily sector-specific – policies.