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Common Agricultural Policy effects on dynamic labour use in agriculture

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  • Petrick, Martin
  • Zier, Patrick

Abstract

The aim of this study is to investigate the effects of direct payments and rural development measures of the EU’s Common Agricultural Policy (CAP) on employment in agriculture. We work with a dynamic labour demand equation augmented by the full set of policy instruments of the CAP, which is estimated on a panel dataset of 69 East German regions. We present results for four estimators which differ in how they eliminate the fixed effects and how they address the endogeneity of the lagged dependent variable. The results suggest that there were few desirable effects on job maintenance in agriculture. While there is some indication that investment subsidies have halted labour shedding on farms, a rise in the general wage level reduced labour use in agriculture. Changes in direct payments had no employment effects. Generally, labour adjustment exhibits a strong path dependency.

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Bibliographic Info

Article provided by Elsevier in its journal Food Policy.

Volume (Year): 37 (2012)
Issue (Month): 6 ()
Pages: 671-678

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Handle: RePEc:eee:jfpoli:v:37:y:2012:i:6:p:671-678

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Web page: http://www.elsevier.com/locate/foodpol

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Keywords: Agricultural employment; Dynamic panel data models; Common Agricultural Policy; East Germany;

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Cited by:
  1. Nordin, Martin, 2013. "Does the Decoupling Reform Affect Agricultural Employment in Sweden? Evidence from an Exogenous Change," Working Papers 2013:40, Lund University, Department of Economics.
  2. LososovaÌ, J. & ZdeneÌŒk, R., 2014. "Key Factors Affecting the Profitability of Farms in the Czech Republic," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(1), March.
  3. Zier, Patrick, 2013. "Econometric impact assessment of the Common Agricultural Policy in East German agriculture," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 71, number 71.

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