The Impact of Subsidies on Persistent and Transient Technical Inefficiency: Evidence from Polish Dairy Farms

Andrzej Pisulewski and Jerzy Marzec

Journal of Agricultural and Applied Economics, 2022, vol. 54, issue 4, 561-582

Abstract: We investigate the impact of five types of subsidies granted under the European Union Common Agricultural Policy on the persistent and transient inefficiency of Polish dairy farms. Our research shows that coupled and environmental subsidies reduce transient technical inefficiency, while the opposite is true for Less Favoured Areas (LFA) and other rural subsidies. Simultaneously, environmental, LFA, and other rural subsidies increase persistent technical inefficiency. These results imply that the impact of each type of subsidy on technical efficiency can be different and that the effect of the particular type of subsidy can vary between transient and persistent technical inefficiency.

Date: 2022
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