Visa for competitiveness: foreign workforce and Italian dairy farms’ performance

Abstract

This paper studies the impact of foreign labour on the competitiveness of Italian dairy farms relying on the theory of foreign labour in profit functions. Application of an endogenous switching regression model identifies the drivers of adoption of the immigrant workforce. A counterfactual analysis performed on unit labour costs between farms employing and non-employing immigrants suggests the essential role of foreign farmworkers on dairy farms’ competitiveness, which provide a cheaper source of labour. The lower unit labour cost for immigrant workers resembles staunch support to the newly introduced ‘social conditionality’, for a CAP delivering also for farmworkers.