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CAP effects on labour use in agriculture: Evidence from alternative dynamic panel data models


  • Petrick, Martin
  • Zier, Patrick


Our aim is to investigate whether the direct payments and rural development measures of the EU’s Common Agricultural Policy (CAP) do make jobs in agriculture safer. We work with a dynamic labour demand equation that is augmented by the full set of policy instruments of the CAP. It is estimated on a unique regional panel dataset of three East German states for the period 1999-2006. We present results for three consistent estimators which differ in how they eliminate the fixed effects and how they instrument the lagged dependent variable, including estimators due to Arellano and Bond, Blundell and Bond, and a corrected least-squares dummy variable estimator due to Kiviet and Bruno. Our results suggest that there were few desirable effects on job maintenance or job creation in agriculture. While there is some indication that investment subsidies have halted labour shedding on farms, the introduction of the fully decoupled Single Farm Payment has likely contributed to significant job losses.

Suggested Citation

  • Petrick, Martin & Zier, Patrick, 2010. "CAP effects on labour use in agriculture: Evidence from alternative dynamic panel data models," 114th Seminar, April 15-16, 2010, Berlin, Germany 61355, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa114:61355

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    Agricultural employment; Dynamic panel data models; Common Agricultural Policy; East Germany; Agricultural and Food Policy; Farm Management; Land Economics/Use; Q18; J43; C23;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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