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Employment effects of CAP payments in the UK non-farm economy

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  • Rizov, Marian
  • Davidova, Sophia
  • Bailey, Alastair

Abstract

This study is concerned with assessing the contribution of the EU’s Common Agricultural Policy (CAP) to non-farm employment in the UK, through its direct and indirect effects on agriculture, up- and downstream industries, and the diversification of rural areas. We employ a micro approach, based on company data from FAME dataset combined with detailed subsidies data from DEFRA. We focus on employment in small and medium enterprises (SMEs) which are central for job creation. As a theoretical framework for our empirical firm employment function we employ a monopolistic competition model with delays in adjustment in prices, employment, and capacity. The generalised method of moments (GMM) is used to estimate the effect of CAP payments on both the level and growth of employment. Our estimation results suggest positive spillovers of CAP payments to non-farm employment. Although the magnitude of the effects is small, it is economically significant especially for the rural labour market.

Suggested Citation

  • Rizov, Marian & Davidova, Sophia & Bailey, Alastair, 2016. "Employment effects of CAP payments in the UK non-farm economy," 160th Seminar, December 1-2, 2016, Warsaw, Poland 249793, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa160:249793
    DOI: 10.22004/ag.econ.249793
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    Cited by:

    1. Bojnec, Štefan & Fertő, Imre, 2022. "Do different types of Common Agricultural Policy subsidies promote farm employment?," Land Use Policy, Elsevier, vol. 112(C).
    2. Davidova, Sophia & Hennessy, Thia & Thomson, Ken, 2016. "Rural Jobs and the CAP: Spitting into the Wind?," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236364, Agricultural Economics Society.
    3. Unay-Gailhard, İlkay & Bojnec, Štefan, 2020. "Public support effect on natural disaster management: A case study of ice storms in forests in Slovenia," Land Use Policy, Elsevier, vol. 95(C).
    4. Pia Nilsson & Sofia Wixe, 2022. "Assessing long-term effects of CAP investment support on indicators of farm performance [Entrepreneurship: productive, unproductive, and destructive]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(4), pages 760-795.
    5. Lillemets, Jüri & Fertő, Imre & Viira, Ants-Hannes, 2022. "The socioeconomic impacts of the CAP: Systematic literature review," Land Use Policy, Elsevier, vol. 114(C).
    6. Garrone, Maria & Emmers, Dorien & Olper, Alessandro & Swinnen, Johan, 2019. "Jobs and agricultural policy: Impact of the common agricultural policy on EU agricultural employment," Food Policy, Elsevier, vol. 87(C), pages 1-1.
    7. Zimmert, Franziska & Zorn, Alexander, 2021. "Direct payments and on-farm employment: evidence from a spatial regression discontinuity design," 61st Annual Conference, Berlin, Germany, September 22-24, 2021 317052, German Association of Agricultural Economists (GEWISOLA).
    8. Hyytiä Nina, 2020. "Russian Food Import Ban – Impacts on Rural and Regional Development in Finland," European Countryside, Sciendo, vol. 12(4), pages 506-526, December.

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    More about this item

    Keywords

    Community/Rural/Urban Development; Labor and Human Capital; Political Economy; Public Economics;
    All these keywords.

    JEL classification:

    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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