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Rural vs. Urban Effects of Terminating Farm Subsidies

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  • Kilkenny, Maureen

Abstract

A rural-urban interregional computable general equilibrium (CGE) model is constructed to simulate the effects of terminating farm subsidies on household incomes, employment rates, farm and non-farm sectoral activity, regional costs of living, and other economic indicators. The magnitudes of the effects depend on regional factor and goods market segmentation. Robust short-run implications are that ceasing farm subsidies would cause rural nonfarm (particularly household service sector) employment to fall and lead to lower household income. On the other hand, rural manufacturing activity expands and the cost of living falls relative to urban. Urban employment, household income, and land rents rise. Although termination of farm subsidies causes a decline in rural real product, the urban real product gain outweighs rural losses.

Suggested Citation

  • Kilkenny, Maureen, 1993. "Rural vs. Urban Effects of Terminating Farm Subsidies," Staff General Research Papers Archive 11121, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:11121
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    Cited by:

    1. Artis Kancs, 2001. "Predicting European Enlargement Impacts: A Framework of Interregional General Equilibrium," Eastern European Economics, Taylor & Francis Journals, vol. 39(5), pages 31-63, September.
    2. Dicks, Michael R., 1996. "Regional Adjustment Costs: A Failure Of National Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 0(Number 1), pages 1-11, July.
    3. Bryden, John Marshall & Bollman, Ray D., 2000. "Rural employment in industrialised countries," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 22(2), March.
    4. Elena G. Irwin & Andrew M. Isserman & Maureen Kilkenny & Mark D. Partridge, 2010. "A Century of Research on Rural Development and Regional Issues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(2), pages 522-553.
    5. Kreins, Peter & Gömann, Horst & Witzke, Peter, 2005. "Erwartbare Konsequenzen einer Dezentralisierung im Bereich der Agrarpolitik," Forschungs- und Sitzungsberichte der ARL: Aufsätze,in: Das föderative System in Deutschland: Bestandsaufnahme, Reformbedarf und Handlungsempfehlungen aus raumwissenschaftlicher Sicht, pages 313-334 Akademie für Raumforschung und Landesplanung (ARL) - Leibniz-Forum für Raumwissenschaften.
    6. Pangbourne, Kate & Roberts, Deborah, 2012. "What multipliers don’t tell you: A spatial analysis of farm household linkages," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134718, Agricultural Economics Society.
    7. Pendell, Dustin L. & Leatherman, John C. & Schroeder, Ted C. & Alward, Gregory S., 2007. "The Economic Impacts of a Foot-And-Mouth Disease Outbreak: A Regional Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 0(Issue Spe), pages 1-15, October.
    8. Burrell, Alison M., 2010. "Is it becoming more difficult to research EU agricultural sector policies?," 50th Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93946, German Association of Agricultural Economists (GEWISOLA).
    9. Färber, Gisela (ed.), 2005. "Das föderative System in Deutschland: Bestandsaufnahme, Reformbedarf und Handlungsempfehlungen aus raumwissenschaftlicher Sicht," Forschungs- und Sitzungsberichte der ARL, Akademie für Raumforschung und Landesplanung (ARL) - Leibniz-Forum für Raumwissenschaften, volume 127, number 224.
    10. Cho, Seong-Hoon & Kim, Seung Gyu & Clark, Christopher D. & Park, William M., 2007. "Spatial Analysis of Rural Economic Development Using a Locally Weighted Regression Model," Agricultural and Resource Economics Review, Cambridge University Press, vol. 36(01), pages 24-38, April.
    11. Maureen Kilkenny, 1995. "Transport Costs and Rural Development," Food and Agricultural Policy Research Institute (FAPRI) Publications 95-wp133, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
    12. Karine Daniel & Maureen Kilkenny, 2009. "Agricultural Subsidies and Rural Development," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(3), pages 504-529.
    13. Loughrey, Jason & Hennessy,Thia & Hanrahan, Kevin & Donnellan, Trevor & Raimondi, Valentina & Olper, Alessandro, 2013. "Determinants of Farm Labour Use: A Comparison between Ireland and Italy," Factor Markets Working Papers 172, Centre for European Policy Studies.
    14. Raimondi, Valentina & Curzi, Daniele & Bertoni, Danilo & Olper, Alessandro, 2013. "Off-farm Labour Decision of Italian Farm Operators," Factor Markets Working Papers 173, Centre for European Policy Studies.
    15. Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics, Blackwell, vol. 26(1), pages 1-23, October.
    16. Donnellan, Trevor & Hennessy, Thia, 2012. "Defining a theoretical model of farm households’ labour allocation decisions," Factor Markets Working Papers 140, Centre for European Policy Studies.
    17. Balamou, Eudokia & Pouliaikas, Kostas & Roberts, Deborah & Psaltopoulos, Demetrios, 2008. "Modeling The Rural-Urban Effects Of Changes In Agricultural Policies: A Bi-Regional Cge Analysis Of Two Case Study Regions," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6651, European Association of Agricultural Economists.
    18. Rose, Adam, 1995. "Input-output economics and computable general equilibrium models," Structural Change and Economic Dynamics, Elsevier, vol. 6(3), pages 295-304, August.
    19. Bryden, John & Bollman, Ray, 2000. "Rural employment in industrialised countries," Agricultural Economics, Blackwell, vol. 22(2), pages 185-197, March.
    20. Tavernier, Edmund M. & Temel, Tugrul T. & Li, Farong, 1997. "The Role of Farm Ownership in Off-Farm Work Participation," Agricultural and Resource Economics Review, Cambridge University Press, vol. 26(01), pages 67-81, April.
    21. Rocchi, Benedetto & Romano, Donato & Stefani, Gianluca, 2002. "Agriculture and Income Distribution: Insights from a SAM of the Italian Economy," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24919, European Association of Agricultural Economists.
    22. Donnellan, Trevor & Hennessy, Thia C., 2012. "The Labour Allocation Decisions of Farm Households: Defining a theoretical model," Working papers 137021, Factor Markets, Centre for European Policy Studies.
    23. Esposti, Roberto, 2008. "Reforming The Cap: An Agenda For Regional Growth?," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44868, European Association of Agricultural Economists.
    24. Mkwara, Bentry, 2013. "To what extent do fertiliser subsidies improve household income and reduce poverty? The case of Malawi," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 0(Number 4), pages 1-12, October.

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