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The Local Impacts of Agricultural Subsidies: Evidence from the Canadian Prairies

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  • Bollman, Ray

    (Rural Development Institute)

  • Ferguson, Shon

    (Research Institute of Industrial Economics (IFN))

Abstract

We estimate the impact of the removal of a railway transportation subsidy on the local economies of Alberta, Saskatchewan and Manitoba, exploiting the large regional variation in these one-time freight rate increases. We find that higher freight rates – and hence lower farm gate prices – resulted in significantly lower farm revenues, farm asset values and farm numbers. Local employment in non-agricultural sectors systematically declined in areas that were hardest hit by the subsidy removal. The results suggest that the subsidy removal had detrimental spillover effects on local non-agricultural economy that are much larger than standard input-output models would predict.

Suggested Citation

  • Bollman, Ray & Ferguson, Shon, 2016. "The Local Impacts of Agricultural Subsidies: Evidence from the Canadian Prairies," Working Paper Series 1129, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1129
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    Cited by:

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    2. Chengyou Li & Zhouhao Sha & Xiaoqin Sun & Yong Jiao, 2022. "The Effectiveness Assessment of Agricultural Subsidy Policies on Food Security: Evidence from China’s Poverty-Stricken Villages," IJERPH, MDPI, vol. 19(21), pages 1-17, October.

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    More about this item

    Keywords

    Agricultural Trade Liberalization; Export Subsidy; Market Access; Spillovers;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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