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Jobs and agricultural policy: impact of the common agricultural policy on EU agricultural employment

Author

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  • Maria Garrone
  • Dorien Emmers
  • Alessandro Olper
  • Jo Swinnen

Abstract

This paper investigates the relationship between EU agricultural subsidies and the outflow of labor from agriculture. We use more representative subsidy indicators and a wider coverage (panel data from 210 EU regions over the period 2004-2014) than has been used before. The data allow to better correct for sample selection bias than previous empirical studies. We find that, on average, CAP subsidies reduce the outflow of labor from agriculture, but the effect is almost entirely due to decoupled Pillar I payments and the impact of Pillar II is mixed. Coupled Pillar I payments have no impact on reducing labor outflow from agriculture, i.e. on preserving jobs in agriculture. The impact of Pillar II is mixed. Our estimates predicts that a decline of 10 percent of the CAP budget would cause an extra 16,000 people to leave EU agriculture each year. A 10 percent decoupling would save 13,000 agricultural jobs each year.

Suggested Citation

  • Maria Garrone & Dorien Emmers & Alessandro Olper & Jo Swinnen, 2018. "Jobs and agricultural policy: impact of the common agricultural policy on EU agricultural employment," Working Papers of LICOS - Centre for Institutions and Economic Performance 633391, KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance.
    • Handle: RePEc:ete:licosp:633391
    Note: paper number LICOS Discussion paper series 404/2018
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    JEL classification:

    • 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
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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