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CAP Subsidies and the Productivity of EU Farms

  • Rizov, Marian
  • Pokrivcak, Jan
  • Ciaian, Pavel

This paper investigates the impact of subsidies from the common agricultural policy on the total factor productivity of farms in the 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 samples from the Farm Accountancy Data Network for EU-15 countries. Our main findings are clear: subsidies had a negative impact on farm productivity in the period before the decoupling reform was implemented; after decoupling the effect of subsidies on productivity was more nuanced, as in several countries it turned positive.

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Paper provided by Centre for European Policy Studies in its series Factor Markets Working Papers with number 148.

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Length: 28 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:eps:fmwppr:148
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