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

Maria Garrone, Dorien Emmers, Alessandro Olper and Johan Swinnen ()

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

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.

Keywords: Agricultural employment; off-farm migration; panel data analysis (search for similar items in EconPapers)
JEL-codes: Q12 Q18 O13 J21 J43 J60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr
Date: 2018
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https://feb.kuleuven.be/drc/licos/publications/dp/DP404

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