Scientific information: Do farmers’ old age pension programs affect farm production? Empirical evidence of dairy farms in Taiwan

Although a considerable body of literature has examined the determinants of farm production, little is known about the role of the farmers’ pension program. This study contributes to this knowledge gap by assessing the impact of the farmers’ pension payments on farm production and the labour allocation using the Old Age Farmers’ Pension program in Taiwan as a case study. In particular, this study quantified the effect of pension payments on the labour allocation of the farm operator and other family members, hired labourers, as well as on the farm production. A unique sample of 465 dairy farms was drawn from the Agricultural Census survey in Taiwan in 2010. The data set was compiled using the national administrative profile of the pension program in Taiwan in order to access an objective pension status for all recipients of the payments. By estimating an endogenous treatment effect model, it was found that the pension payments decreased the amount of the on-farm work of the farm operator. In contrast, it increased the on-farm labour use of the family members. Moreover, the availability of the pension program decreased the size of farm operation and the farm productivity.