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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 paper investigates the effect of the CAP payments on the indirectly generated non-farm jobs and whether there are differences in the effect according to business location - rural or urban - and according to CAP measures, in particular Pillar 1 and Pillar 2. A microeconomic approach is employed, based on company data from FAME dataset combined with detailed subsidies data from DEFRA. The focus is on employment in small and medium-sized enterprises (SMEs), which are central for job creation. The generalised method of moments (GMM) is used to estimate the effect of CAP payments on both the level and growth of employment. The results suggest positive net spillovers of CAP payments to non-farm employment. Although the magnitude of the effect is small, it is economically significant. Relative to Pillar 2, Pillar 1 payments have a stronger positive effect. As expected, the nonfarm employment effect is particularly important for rural SMEs.

Suggested Citation

  • Rizov, Marian & Davidova, Sophia & Bailey, Alastair, 2017. "Employment effects of CAP payments in the UK non-farm economy," 91st Annual Conference, April 24-26, 2017, Royal Dublin Society, Dublin, Ireland 258637, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc17:258637
    DOI: 10.22004/ag.econ.258637
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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," 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

    Agricultural and Food Policy; Community/Rural/Urban Development; Labor and Human Capital; 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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