IDEAS home Printed from https://ideas.repec.org/p/ags/iaae12/126645.html
   My bibliography  Save this paper

Reallocation of Agricultural Labor and Farm Subsidies: Evidence From the EU Regions

Author

Listed:
  • Olper, Alessandro
  • Raimondi, Valentina
  • Cavicchioli, Daniele
  • Vigani, Mauro

Abstract

The paper deals with the determinants of labour out-migration from agriculture across 149 EU regions over the 1990-2008 period. The central aim is to shed light on the role played by CAP payments on this important adjustment process. Using static and dynamic panel data estimators, we show that standard neo-classic drivers, like the relative income and the relative labour share, represent significant determinants of the inter-sectoral migration of agricultural labour. Overall, CAP payments contributed significantly to job creation in agriculture, although the magnitude of the economic effect was quite moderate. We also found that Pillar I subsidies exerted an effect approximately two times greater than that of Pillar II payments

Suggested Citation

  • Olper, Alessandro & Raimondi, Valentina & Cavicchioli, Daniele & Vigani, Mauro, "undated". "Reallocation of Agricultural Labor and Farm Subsidies: Evidence From the EU Regions," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126645, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae12:126645
    DOI: 10.22004/ag.econ.126645
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/126645/files/Olper-IAAE-16518.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.126645?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Salvioni, Cristina & Sciulli, Dario, 2011. "Impact of Rural Development Policy and Less Favored Areas Scheme: A Difference in Difference Matching Approach," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115988, European Association of Agricultural Economists.
    2. Catherine Benjamin & Ayal Kimhi, 2006. "Farm work, off-farm work, and hired farm labour: estimating a discrete-choice model of French farm couples' labour decisions," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(2), pages 149-171, June.
    3. Pavel Ciaian & d’Artis Kancs, 2012. "The Capitalization of Area Payments into Farmland Rents: Micro Evidence from the New EU Member States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 60(4), pages 517-540, December.
    4. Becker, Sascha O. & Egger, Peter H. & von Ehrlich, Maximilian, 2012. "Too much of a good thing? On the growth effects of the EU's regional policy," European Economic Review, Elsevier, vol. 56(4), pages 648-668.
    5. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    6. Ashok K. Mishra & Barry K. Goodwin, 1997. "Farm Income Variability and the Supply of Off-Farm Labor," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 880-887.
    7. Joakim Gullstrand & Kerem Tezic, 2008. "Who leaves after entering the primary sector? Evidence from Swedish micro-level data," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(1), pages 1-28, March.
    8. Andrea Pufahl & Christoph R. Weiss, 2009. "Evaluating the effects of farm programmes: results from propensity score matching," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 36(1), pages 79-101, March.
    9. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    10. Dewbre, Joe & Mishra, Ashok K., 2007. "Impact of Program Payments on Time Allocation and Farm Household Income," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(3), pages 1-17, December.
    11. Todaro, Michael P, 1969. "A Model for Labor Migration and Urban Unemployment in Less Developed Countries," American Economic Review, American Economic Association, vol. 59(1), pages 138-148, March.
    12. Berlinschi, Ruxanda & Van Herck, Kristine, 2011. "Farm Subsidies and Agricultural Employment: The Education Channel," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114248, European Association of Agricultural Economists.
    13. Jerzy Michalek & Pavel Ciaian & d’Artis Kancs, 2014. "Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the European Union," Land Economics, University of Wisconsin Press, vol. 90(2), pages 260-289.
    14. Butzer, Rita & Mundlak, Yair & Larson, Donald F., 2003. "Intersectoral Migration in Southeast Asia: Evidence from Indonesia, Thailand, and the Philippines," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 35(Supplemen), pages 1-13.
    15. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    16. Gunnar Breustedt & Thomas Glauben, 2007. "Driving Forces behind Exiting from Farming in Western Europe," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(1), pages 115-127, February.
    17. Stephen R. Bond, 2002. "Dynamic panel data models: a guide to micro data methods and practice," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(2), pages 141-162, August.
    18. Becker, Sascha O. & Egger, Peter H. & von Ehrlich, Maximilian, 2010. "Going NUTS: The effect of EU Structural Funds on regional performance," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 578-590, October.
    19. Barrett E. Kirwan, 2009. "The Incidence of U.S. Agricultural Subsidies on Farmland Rental Rates," Journal of Political Economy, University of Chicago Press, vol. 117(1), pages 138-164, February.
    20. Larson, Donald & Mundlak, Yair, 1997. "On the Intersectoral Migration of Agricultural Labor," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 295-319, January.
    21. Hisham El-Osta & Ashok Mishra & Mary Ahearn, 2004. "Labor Supply by Farm Operators Under “Decoupled” Farm Program Payments," Review of Economics of the Household, Springer, vol. 2(4), pages 367-385, August.
    22. Sergio H. Lence & Ashok K. Mishra, 2003. "The Impacts of Different Farm Programs on Cash Rents," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 753-761.
    23. Stephan J. Goetz & David L. Debertin, 1996. "Rural Population Decline in the 1980s: Impacts of Farm Structure and Federal Farm Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 517-529.
    24. Dennis, Benjamin N. & Iscan, Talan B., 2007. "Productivity growth and agricultural out-migration in the United States," Structural Change and Economic Dynamics, Elsevier, vol. 18(1), pages 52-74, March.
    25. Benjamin, Catherine & Kimhi, Ayal, 2003. "Farm Work, Off-Farm Work, And Hired Farm Labor: Estimating A Discrete-Choice Model Of French Farm Couples' Labor Decisions," Discussion Papers 14990, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    26. Pavel Ciaian & d'Artis Kancs & Sergio Gomez y Paloma, 2010. "Distributional Effects of CAP Subsidies: Micro Evidence from the EU," EERI Research Paper Series EERI_RP_2010_05, Economics and Econometrics Research Institute (EERI), Brussels.
    27. Esposti, Roberto, 2011. "Evaluating the CAP Reform as a multiple treatment effect: evidence from Italian farms," 122nd Seminar, February 17-18, 2011, Ancona, Italy 100216, European Association of Agricultural Economists.
    28. Thomas Glauben & Hendrik Tietje & Christoph Weiss, 2006. "Agriculture on the move: Exploring regional differences in farm exit rates in Western Germany," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 26(1), pages 103-118, March.
    29. Hansen, Heiko & Herrmann, Roland, 2012. "The two dimensions of policy impacts on economic cohesion: Concept and illustration for the CAP," Food Policy, Elsevier, vol. 37(4), pages 483-491.
    30. Anders, Sven & Harsche, Johannes & Herrmann, Roland & Salhofer, Klaus, 2004. "Regional income effects of producer support under the CAP," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 73.
    31. Martin Petrick & Patrick Zier, 2011. "Regional employment impacts of Common Agricultural Policy measures in Eastern Germany: a difference‐in‐differences approach," Agricultural Economics, International Association of Agricultural Economists, vol. 42(2), pages 183-193, March.
    32. Barry K. Goodwin & Matthew T. Holt, 2002. "Parametric and Semiparametric Modeling of the Off-Farm Labor Supply of Agrarian Households in Transition Bulgaria," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(1), pages 184-209.
    33. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
    34. Ky–sti Pietola & Minna V”re & Alfons Oude Lansink, 2003. "Timing and type of exit from farming: farmers' early retirement programmes in Finland," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 30(1), pages 99-116, March.
    35. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    36. Roberto Esposti, 2007. "Regional Growth and Policies in the European Union: Does the Common Agricultural Policy Have a Counter-Treatment Effect?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 116-134.
    37. John E. Lee, 1965. "Allocating Farm Resources between Farm and Nonfarm Uses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(1), pages 83-92.
    38. Maddala, G S & Wu, Shaowen, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-652, Special I.
    39. Mundlak, Yair, 1979. "Intersectoral factor mobility and agricultural growth:," Research reports 6, International Food Policy Research Institute (IFPRI).
    40. Thia C. Hennessy & Tahir Rehman, 2008. "Assessing the Impact of the ‘Decoupling’ Reform of the Common Agricultural Policy on Irish Farmers’ Off‐farm Labour Market Participation Decisions," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 41-56, February.
    41. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Olper, Alessandro & Raimondi, Valentina & Cavicchioli, Daniele & Vigani, Mauro, 2011. "Does Common Agricultural Policy Reduce Farm Labour Migration? A Panel Data Analysis Across EU Regions," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114597, European 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. 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.
    4. Stephen O'Neill & Kevin Hanrahan, 2016. "The capitalization of coupled and decoupled CAP payments into land rental rates," Agricultural Economics, International Association of Agricultural Economists, vol. 47(3), pages 285-294, May.
    5. Tocco, Barbara & Davidova, Sophia & Bailey, Alastair, 2013. "The Impact of CAP Payments on the Exodus of Labour from Agriculture in Selected EU Member States," Working papers 160742, Factor Markets, Centre for European Policy Studies.
    6. Feichtinger, Paul & Salhofer, Klaus, 2016. "Decoupled Single Farm Payments of the CAP and Land Rental Prices," Discussion Papers DP-65-2016, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.
    7. Seidu, Ayuba & Onel, Gulcan & Moss, Charles Britt, 2018. "Impact of International Remittance on Out-Farm Labor Migration in Developing Countries: A Dynamic Panel Data Analysis," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266531, Southern Agricultural Economics Association.
    8. Corsi, Alessandro & Salvioni, Cristina, 2017. "Once part-timer always part-timer? Causes for persistence in off farm work state of farmers," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 6(2), September.
    9. Huy Quang Doan, 2019. "Trade, Institutional Quality and Income: Empirical Evidence for Sub-Saharan Africa," Economies, MDPI, vol. 7(2), pages 1-23, May.
    10. Scott, K. Rebecca, 2015. "Demand and price uncertainty: Rational habits in international gasoline demand," Energy, Elsevier, vol. 79(C), pages 40-49.
    11. repec:zbw:inwedp:652016 is not listed on IDEAS
    12. Gharehgozli, Orkideh, 2021. "An empirical comparison between a regression framework and the Synthetic Control Method," The Quarterly Review of Economics and Finance, Elsevier, vol. 81(C), pages 70-81.
    13. Peñasco, Cristina & del Río, Pablo & Romero-Jordán, Desiderio, 2017. "Gas and electricity demand in Spanish manufacturing industries: An analysis using homogeneous and heterogeneous estimators," Utilities Policy, Elsevier, vol. 45(C), pages 45-60.
    14. Gulati, Rachita & Goswami, Anju & Kumar, Sunil, 2019. "What drives credit risk in the Indian banking industry? An empirical investigation," Economic Systems, Elsevier, vol. 43(1), pages 42-62.
    15. Armey, Laura E. & McNab, Robert M., 2018. "Expenditure decentralization and natural resources," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 52-61.
    16. Scott, K. Rebecca, 2011. "Demand and Price Volatility: Rational Habits in International Gasoline Demand," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2q87432b, Department of Agricultural & Resource Economics, UC Berkeley.
    17. Tocco, Barbara & Davidova, Sophia & Bailey, Alastair Creation-Date: 2012-02, "undated". "Key Issues in Agricultural Labour Markets: A Review of Major Studies and Project Reports on Agriculture and Rural Labour Markets," Factor Markets Working Papers 126, Centre for European Policy Studies.
    18. Paul Feichtinger & Klaus Salhofer, 2016. "Decoupled Single Farm Payments of the CAP and Land Rental Prices," Working Papers 652016, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.
    19. Gao, Da & Li, Ge & Yu, Jiyu, 2022. "Does digitization improve green total factor energy efficiency? Evidence from Chinese 213 cities," Energy, Elsevier, vol. 247(C).
    20. Luigi Biagini & Federico Antonioli & Simone Severini, 2020. "The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 652-675, September.
    21. Yongfu Huang, 2011. "Private investment and financial development in a globalized world," Empirical Economics, Springer, vol. 41(1), pages 43-56, August.

    More about this item

    Keywords

    Farm Management;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iaae12:126645. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.