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Jobs and Agricultural Policy: Impact of the Common Agricultural Policy on EU Agricultural Employment

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  • Maria Garrone
  • Dorien Emmers
  • Alessandro Olper
  • Johan 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.

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  • Maria Garrone & Dorien Emmers & Alessandro Olper & Johan Swinnen, 2018. "Jobs and Agricultural Policy: Impact of the Common Agricultural Policy on EU Agricultural Employment," LICOS Discussion Papers 40418, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  • Handle: RePEc:lic:licosd:40418
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    Cited by:

    1. Marko Lovec & Tanja Šumrada & Emil Erjavec, 2020. "New CAP Delivery Model, Old Issues," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(2), pages 112-119, March.
    2. Bertoni, Danilo & Curzi, Daniele & Aletti, Giacomo & Olper, Alessandro, 2020. "Estimating the effects of agri-environmental measures using difference-in-difference coarsened exact matching," Food Policy, Elsevier, vol. 90(C).

    More about this item

    Keywords

    Agricultural employment; off-farm migration; panel data analysis;

    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
    • 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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