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CAP Reform and Its Impact on Structural Change and Productivity Growth: A Cross Country Analysis


  • Andrius Kazukauskas

    () (Department of Economics, Trinity College Dublin)

  • Carol Newman

    () (Department of Economics, Trinity College Dublin)

  • Johannes Sauer

    (School of Social Sciences, University of Manchester)


The decoupling of direct payments from production, introduced in the recent reform of the Common Agricultural Policy (CAP) is expected to make production decisions more market-oriented and farmers more productive. However, ex-post analyses of the productivity of farms have yet to uncover any evidence of a positive impact of the decoupling policy on farm productivity. Using Irish, Danish and Dutch farm level data, we identify whether the decoupling policy has contributed to productivity growth in agriculture and to what extent enterprise switching and specialisation are important productivity improving mechanisms. We find some evidence that the decoupling policy and related farm enterprise specialisation had significant positive effects on farm productivity.

Suggested Citation

  • Andrius Kazukauskas & Carol Newman & Johannes Sauer, 2011. "CAP Reform and Its Impact on Structural Change and Productivity Growth: A Cross Country Analysis," Trinity Economics Papers tep0411, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduee:tep0411

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    References listed on IDEAS

    1. Jan De Loecker, 2011. "Product Differentiation, Multiproduct Firms, and Estimating the Impact of Trade Liberalization on Productivity," Econometrica, Econometric Society, vol. 79(5), pages 1407-1451, September.
    2. Nigel Key & Ruben N. Lubowski & Michael J. Roberts, 2005. "Farm-Level Production Effects from Participation in Government Commodity Programs: Did the 1996 Federal Agricultural Improvement and Reform Act Make a Difference?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1211-1219.
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    Blog mentions

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    1. Impact of CAP subsidies on productivity - by Alan Matthews
      by Alan Matthews in CAP on 2013-04-02 02:50:25


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    Cited by:

    1. Jaraite, Jurate & Kažukauskas, Andrius, 2011. "The effect of mandatory agro-environmental policy on farm environmental performance," CERE Working Papers 2011:13, CERE - the Center for Environmental and Resource Economics.
    2. Arovuori, Kyösti & Yrjölä, Tapani, 2015. "The impact of the CAP and its reforms on the productivity growth in agriculture," 147th Seminar, October 7-8, 2015, Sofia, Bulgaria 212241, European Association of Agricultural Economists.

    More about this item


    productivity; subsidy decoupling; semi-parametric estimation; switching; specialisation;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • 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

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