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CAP Subsidies and Productivity of EU Farms

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  • Rizov, Marian
  • Pokrivcak, Ján
  • Ciaian, Pavel

Abstract

The paper investigates the impact of the Common Agricultural Policy (CAP) subsidies on farm total factor productivity (TFP) in the European Union (EU). We employ a structural semi-parametric estimation algorithm directly incorporating the effect of subsidies into a model of unobserved productivity. We empirically study the effects using the Farm Accountancy Data Network (FADN) samples for the EU-15 countries. Our main findings are clear: subsidies impact negatively farm productivity in the period before the decoupling reform was implemented; after decoupling the effect of subsidies on productivity is more nuanced as in several countries it turned positive.
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Suggested Citation

  • Rizov, Marian & Pokrivcak, Ján & Ciaian, Pavel, 2013. "CAP Subsidies and Productivity of EU Farms," 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152259, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatr13:152259
    DOI: 10.22004/ag.econ.152259
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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L00 - Industrial Organization - - General - - - General
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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