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Common Agricultural Policy effects on dynamic labour use in agriculture

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  • Petrick, Martin
  • Zier, Patrick

Abstract

The aim of this study is to investigate the effects of direct payments and rural development measures of the EU’s Common Agricultural Policy (CAP) on employment in agriculture. We work with a dynamic labour demand equation augmented by the full set of policy instruments of the CAP, which is estimated on a panel dataset of 69 East German regions. We present results for four estimators which differ in how they eliminate the fixed effects and how they address the endogeneity of the lagged dependent variable. The results suggest that there were few desirable effects on job maintenance in agriculture. While there is some indication that investment subsidies have halted labour shedding on farms, a rise in the general wage level reduced labour use in agriculture. Changes in direct payments had no employment effects. Generally, labour adjustment exhibits a strong path dependency. Das Ziel dieser Studie ist es, die Auswirkungen der im Rahmen der Gemeinsamen Agrarpolitik (GAP) gewährten Direktzahlungen und der Maßnahmen zur ländlichen Entwicklung auf die Beschäftigung im Agrarsektor zu untersuchen. Wir verwenden hierfür eine dynamische Arbeitsnachfragegleichung, welche um das vollständige Maßnahmenbündel der GAP erweitert wurde. Diese Gleichung wird für einen Paneldatensatz aus 69 ostdeutschen Landkreisen geschätzt. Wir stellen Ergebnisse für vier verschiedene Schätzer vor, die sich darin unterscheiden, wie sie fixe Effekte und die Endogenität der verzögert abhängigen Variable kontrollieren. Die Ergebnisse legen nahe, dass es wenige wünschenswerte Effekte auf die Beschäftigungssicherung in der Landwirtschaft gegeben hat. Einige Ergebnisse sprechen dafür, dass Investitionsbeihilfen den Arbeitskräfteabbau verlangsamt haben. Ein Anstieg des allgemeinen Lohnniveaus hat den Arbeitseinsatz in der Landwirtschaft verringert. Änderungen in den Direktzahlungen hatten keinen Beschäftigungseffekt. Grundsätzlich zeigt die Anpassung des Arbeitseinsatzes eine starke Pfadabhängigkeit.

Suggested Citation

  • Petrick, Martin & Zier, Patrick, 2012. "Common Agricultural Policy effects on dynamic labour use in agriculture," Structural Change in Agriculture/Strukturwandel im Agrarsektor (SiAg) Working Papers 134425, Humboldt University Berlin, Department of Agricultural Economics.
  • Handle: RePEc:ags:huscpw:134425
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    Cited by:

    1. Louhichi, Kamel & Ciaian, Pavel & Espinosa, Maria & Colen, Liesbeth & Perni, Angel & Gomez y Paloma, Sergio, 2015. "EU-wide individual Farm Model for CAP Analysis (IFM-CAP): Application to Crop Diversification Policy," 2015 Conference, August 9-14, 2015, Milan, Italy 212155, International Association of Agricultural Economists.
    2. Zier, Patrick, 2013. "Econometric impact assessment of the Common Agricultural Policy in East German agriculture," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 71, number 71.
    3. Lososova, J. & Zdenek, R., 2014. "Key Factors Affecting the Profitability of Farms in the Czech Republic," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(1), March.
    4. Takahashi, Taro & Maruya, Kaori & Nakajima, Toru, 2016. "Non-farmers’ willingness to farm: a large-scale choice experiment to identify policy options that can induce new entry to the agricultural industry," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236368, Agricultural Economics Society.
    5. Petrick, Martin, 2014. "Modernising Russia's cattle and dairy sectors under WTO conditions: Insights from East Germany
      [Die Modernisierung der russischen Rinder- und Milchproduktion unter WTO-Bedingungen: Erfahrungen aus
      ," IAMO Discussion Papers 150, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    6. Petrick, Martin, 2017. "Incentive provision to farm workers in post-socialist settings: evidence from East Germany and North Kazakhstan," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 239-256.
    7. Martin Nordin, 2014. "Does the Decoupling Reform Affect Agricultural Employment in Sweden? Evidence from an Exogenous Change," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(3), pages 616-636, September.
    8. Louhichi, Kamel & Ciaian, Pavel & Espinosa, Maria & Colen, Liesbeth & Perni, Angel & Gomez y Paloma, Sergio, 2015. "Farm-level economic impacts of EU-CAP greening measures," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205309, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    9. Fan, Yubing & Wang, Chenggang & Nan, Zhibiao, 2014. "Comparative evaluation of crop water use efficiency, economic analysis and net household profit simulation in arid Northwest China," Agricultural Water Management, Elsevier, vol. 146(C), pages 335-345.
    10. Fertő, Imre & Bakucs, Zoltán & Varga, Ágnes, 2016. "Impact of EU subsidies on the of rural areas in Hungary," 160th Seminar, December 1-2, 2016, Warsaw, Poland 249826, European Association of Agricultural Economists.
    11. Demirdöğen, Alper & Olhan, Emine & Chavas, Jean-Paul, 2016. "Food vs. fiber: An analysis of agricultural support policy in Turkey," Food Policy, Elsevier, vol. 61(C), pages 1-8.
    12. Rizov, Marian & Davidova, Sophia & Bailey, Alastair, 2016. "Employment effects of CAP payments in the UK non-farm economy," 160th Seminar, December 1-2, 2016, Warsaw, Poland 249793, European Association of Agricultural Economists.
    13. Urban, Kirsten & Jensen, Hans G. & Brockmeier, Martina, 2016. "How decoupled is the Single Farm Payment and does it matter for international trade?," Food Policy, Elsevier, vol. 59(C), pages 126-138.

    More about this item

    Keywords

    Agricultural employment; Dynamic panel data models; Common Agricultural Policy; East Germany; Landwirtschaftliche Beschäftigung; Dynamisches Paneldaten Modell; Gemeinsame Agrarpolitik; Ostdeutschland; Agricultural and Food Policy; Labor and Human Capital; 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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