Farmers’ retirement preferences under succession prospects: is early retirement still an option in EU family farms?

Confronted with the urgent demographic challenges, there is ongoing debate about the possible re-introduction of early retirement schemes (ERS) to incentivise farm transfer in the EU. With a view to contributing to this debate, this paper verifies whether and how the preferences for early retirement change due to succession prospects. Based on data from 559 Polish and Italian farmers, we employ a Multinomial Logistic regression with instrument variable and bias-reduced penalized estimators. We found that, compared to retirement at later stages, preference for early retirement is always significantly lower when a successor is identified, and it significantly decreases when the certainty of succession increases. Farmers with succession prospects prefer retirement when the successor is ready to succeed or no retirement at all over retirement at earlier stage. Our findings contribute to explain the generally low success of ERS, and to draw policy considerations about the potential re-introduction of these schemes.