Rural vs. Urban Effects of Terminating Farm Subsidies

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Rural vs. Urban Effects of Terminating Farm Subsidies

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Kilkenny, Maureen

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Maureen Kilkenny

Abstract

A rural-urban interregional computable general equilibrium (CGE) model is constructed to simulate the effects of terminating farm subsidies on household incomes, employment rates, farm and non-farm sectoral activity, regional costs of living, and other economic indicators. The magnitudes of the effects depend on regional factor and goods market segmentation. Robust short-run implications are that ceasing farm subsidies would cause rural nonfarm (particularly household service sector) employment to fall and lead to lower household income. On the other hand, rural manufacturing activity expands and the cost of living falls relative to urban. Urban employment, household income, and land rents rise. Although termination of farm subsidies causes a decline in rural real product, the urban real product gain outweighs rural losses.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 11121.

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Date of creation: 04 Dec 2003
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Publication status: Published in American Journal of Agricultural Economics, November 1993, Vol. 75, No. 4, pp. 968-980.
Handle: RePEc:isu:genres:11121

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Esposti, Roberto, 2008. "Reforming The Cap: An Agenda For Regional Growth?," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44868, European Association of Agricultural Economists. [Downloadable!]
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d’Artis Kancs, 2001. "Predicting European Enlargement Impacts: A Framework of Inter-regional General Equilibrium," EERI Research Paper Series EERI_RP_2001_01, Economics and Econometrics Research Institute (EERI). [Downloadable!]
Other versions:
- Artis Kancs, 2001. "Predicting European Enlargement Impacts: A Framework of Interregional General Equilibrium," Eastern European Economics, M.E. Sharpe, Inc., vol. 39(5), pages 31-63, September. [Downloadable!] (restricted)
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Kilkenny, Maureen, 1998. "Transport Costs and Rural Development," Staff General Research Papers 1185, Iowa State University, Department of Economics.
Other versions:
- Maureen Kilkenny, 1995. "Transport Costs and Rural Development," Center for Agricultural and Rural Development (CARD) Publications 95-wp133, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
- Kilkenny, Maureen, 2003. "Transport Costs and Rural Development," Staff General Research Papers 10309, Iowa State University, Department of Economics.
Tavernier, Edmund M. & Temel, Tugrul T. & Li, Farong, 1997. "The Role Of Farm Ownership In Off-Farm Work Participation," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 26(1), April. [Downloadable!]
Balamou, Eudokia & Pouliaikas, Kostas & Roberts, Deborah & Psaltopoulos, Demetrios, 2008. "Modeling The Rural-Urban Effects Of Changes In Agricultural Policies: A Bi-Regional Cge Analysis Of Two Case Study Regions," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6651, European Association of Agricultural Economists. [Downloadable!]

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