Do they come back again? The symmetry and reversibility of off-farm employment

A panel of more than 39,000 Upper Austrian farm households has been used to investigate off-farm labour market behaviour. We find the full-time/part-time decision of farmers to be determined by their previous off-farm employment status (state dependence). Whereas an increase in the market wage significantly raises the probability of switching from full-time to part-time farming, a comparable wage reduction does not influence the probability of returning to full-time farming again. We thus conclude that the assumption of full-reversibility necessarily made in empirical models based on cross-section data cannot be supported with Upper Austrian data.