Do efficient small-scale fishers stay active in eras of introducing individual transferable quotas? Evidence from Denmark

Theory suggests the use of individual transferable quotas (ITQs) as a solution to overcapacity and to keep efficient fishers active. While the reduction of overcapacity under ITQ implementation is well documented, empirical evidence on the role of capacity utilisation in adjusting the labour force is scarce. This article analyses whether the capacity utilisation of the vessels that fishers own/work on influences their probability of continuing fishing or whether factors such as fishing income and pension are more important. Danish small-scale fisheries with vessels less than 17 m in length, in which ITQs were introduced in 2007, are studied using a multinomial logit regression based on a unique dataset of individual income and socioeconomic characteristics of Danish fishers in the period 2002-2012 as well as individual vessel data. Together with other relevant socioeconomic variables, vessel capacity utilisation is included in the regression. The latter is identified in a productivity analysis of all commercial active vessels using Data Envelopment Analysis. It is found that increasing vessel capacity utilisation both significantly and positively influences the decision to stay in a small-scale fishery. Increasing income from fisheries also significantly influences the probability of staying in the fishery business. The Danish results provide evidence that the most efficient fishers are those who remain active when ITQs are implemented.