How agricultural subsidies shape local employment: evidence from the French support policies for mountain areas

Yrabo Dabou, Julie Le Gallo and Lionel Védrine ()
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Yrabo Dabou: CESAER - Centre d'économie et de sociologie rurales appliquées à l'agriculture et aux espaces ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement
Julie Le Gallo: CESAER - Centre d'économie et de sociologie rurales appliquées à l'agriculture et aux espaces ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement
Lionel Védrine: Territoires - Territoires - AgroParisTech - VAS - VetAgro Sup - Institut national d'enseignement supérieur et de recherche en alimentation, santé animale, sciences agronomiques et de l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UCA - Université Clermont Auvergne

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Abstract: Do place-based farm subsidies reshape rural labour markets beyond agriculture? We estimate the causal impact of France's mountain-area support (MA) scheme within the Less Favoured Areas (LFA) framework on municipal employment over 1962–1990, combining entropy balancing with an extended two-way fixed-effects estimator on 23,651 municipalities. We find that MA classification reduces total agricultural employment by roughly 15%, driven by an 18% decline in self-employment as farms consolidate and expand. Salaried farm jobs rise by about 16%, but this increase falls well short of offsetting the contraction of family labour. We also document positive spillovers to neighbouring municipalities and inter-sectoral linkages beyond agriculture: trade and services expand within treated municipalities, while agri-food and construction employment rises in nearby untreated areas. Treatment heterogeneity indicates stronger effects where farms are mid-sized and market access is limited, suggesting the programme compensates for labor market thinness in remote areas rather than complementing pre-existing urban advantages. Overall, a policy designed to sustain farming in disadvantaged areas appears to have reconfigured both the composition and the spatial distribution of rural employment.

Keywords: Agricultural Economics; Agricultural Geography; Rural Sociology; Social Policy; Spatial Economics; Welfare; Economic Impact of Public Employment on Local Labor Markets (search for similar items in EconPapers)
Date: 2026-08-18
Note: View the original document on HAL open archive server: https://hal.science/hal-05720166v2
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Published in Annals of Regional Science, 2026, 75 (3), pp.111. ⟨10.1007/s00168-026-01537-z⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05720166

DOI: 10.1007/s00168-026-01537-z

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