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Impact of the Agri-Environmental Scheme of the Common Agricultural Policy on Agricultural Employment

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  • Garrone, Maria
  • Emmers, Dorien
  • Olper, Alessandro
  • Swinnen, Johan

Abstract

This paper investigates the relationship between EU agricultural subsidies, including agri-environmental subsidies, and the outflow of labor from agriculture. We use more representative subsidy indicators and a wider coverage (panel data from 210 EU regions over the period 2004-2014) than has been used before. The data allow to better correct for sample selection bias than previous empirical studies. We find that, on average, CAP subsidies reduce the outflow of labor from agriculture, but the effect is almost entirely due to decoupled Pillar I payments. Coupled Pillar I payments have no impact on reducing labor outflow from agriculture, i.e. on preserving jobs in agriculture. The impact of overall Pillar II is mixed, but agri-environmental payments strongly reduce the outflow of labor from agriculture. Our estimates predict that an increase of 10 percent of the CAP budget would prevent an extra 16,000 people from leaving the EU agriculture sector each year. A 10 percent decoupling would save 13,000 agricultural jobs each year. However, the budgetary costs are large. The estimated cost exceeds € 300,000 per year (or € 25,000 per month) per job saved in agriculture.

Suggested Citation

  • Garrone, Maria & Emmers, Dorien & Olper, Alessandro & Swinnen, Johan, 2019. "Impact of the Agri-Environmental Scheme of the Common Agricultural Policy on Agricultural Employment," 172nd EAAE Seminar, May 28-29, 2019, Brussels, Belgium 289831, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa172:289831
    DOI: 10.22004/ag.econ.289831
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    Cited by:

    1. Maietta, Ornella Wanda & De Devitiis, Biagia & Destefanis, Sergio & Suppa, Domenico, 2019. "Human capital and rural development policy: evidence from European FADN regions," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 8(3), December.
    2. Ciaian, Pavel & Espinosa, Maria & Louhichi, Kamel & Perni, Angel, 2020. "Farm Level Impacts of Trade Liberalisation and CAP Removal Across EU: An Assessment using the IFM-CAP Model," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 69(2), May.
    3. Berchoux, Tristan & Hutton, Craig W. & Hensengerth, Oliver & Voepel, Hal E. & Tri, Van P.D. & Vu, Pham T. & Hung, Nghia N. & Parsons, Dan & Darby, Stephen E., 2023. "Effect of planning policies on land use dynamics and livelihood opportunities under global environmental change: Evidence from the Mekong Delta," Land Use Policy, Elsevier, vol. 131(C).
    4. 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).

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    Keywords

    Agricultural and Food Policy;

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