Does Agriculture Matter? Revisiting the Farm Income Problem in Italy

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