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Cap Impacts On Labour Use In East German Agriculture

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  • Petrick, Martin
  • Zier, Patrick

Abstract

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 Impacts On Labour Use In East German Agriculture," 50th Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93962, German Association of Agricultural Economists (GEWISOLA).
  • Handle: RePEc:ags:gewi10:93962
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    References listed on IDEAS

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    4. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
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    13. Pietola, Kyosti & Myers, Robert J., 1998. "Investment Under Uncertainty And Dynamic Adjustment In Finnish Pork Industry," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20953, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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