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

Author

Listed:
  • 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 Department of Economics, Leuven 633391, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:633391
    Note: paper number LICOS Discussion paper series 404/2018
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    21. 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.
    22. Xinru Han & Ping Xue & Ningning Zhang, 2021. "Impact of Grain Subsidy Reform on the Land Use of Smallholder Farms: Evidence from Huang-Huai-Hai Plain in China," Land, MDPI, vol. 10(9), pages 1-15, September.
    23. Sha, Zhouhao & Ren, Dong & Li, Chengyou & Wang, Zeru, 2024. "Agricultural subsidies on common prosperity: Evidence from the Chinese social survey," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1-18.
    24. Zimmert, Franziska & Zorn, Alexander, 2021. "Direct payments and on-farm employment: evidence from a spatial regression discontinuity design," 61st Annual Conference, Berlin, Germany, September 22-24, 2021 317052, German Association of Agricultural Economists (GEWISOLA).
    25. Agnė Žičkienė & Rasa Melnikienė & Mangirdas Morkūnas & Artiom Volkov, 2022. "CAP Direct Payments and Economic Resilience of Agriculture: Impact Assessment," Sustainability, MDPI, vol. 14(17), pages 1-24, August.

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    More about this item

    Keywords

    Agricultural employment; Off-farm migration; panel data analysis;
    All these keywords.

    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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