Productivity effects of CAP investment support: Evidence from Sweden using matched panel data |
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| Affiliation: | 1. Department of Law and Politics, Middlesex University, the Burroughs, NW4 4BT, London, UK;2. School of Geography, Geology and the Environment, Kingston University, Kingston upon Thames, Surrey, KT1 2EE, UK;1. European Commission, Joint Research Centre, Seville, Spain;2. INRA – UMR Economie Publique, Thiverval-Grignon, France;1. Agricultural Economics and Policy, ETH Zürich, Sonneggstrasse 33, 8092 Zürich, Switzerland;2. Forest Ecology, Department of Environmental Systems Science, ETH Zürich, Universitätstrasse 16, 8092 Zürich, Switzerland;3. Planning of landscape and urban systems Department of Civil, Environmental and Geomatic Engineering, ETH Zürich, Stefano-Franscini-Platz 5, 8093 Zürich, Switzerland;4. Landscape Dynamics, Swiss Federal Research Institute WSL, Zürcherstrasse 111, 8903 Birmensdorf, Switzerland |
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| Abstract: | This paper studies the effects of investment support from the common agricultural policy on labour and total factor productivity of agricultural firms in Sweden. Detailed firm-level data on 34 300 firms are used to estimate a matched panel model that relates firm productivity to a series of factors reflecting internal and external characteristics. The recently developed Coarsened Exact Matching method is used to estimate matched control groups and handle selection bias. Findings show a positive and significant treatment effect of investment support on firm productivity, but only for small firms. The analysis also reveals that an increase in the size of the support in relation to firm income has a negative and significant impact on productivity for all firms. Differentiating between various types of investment supports indicates heterogeneous treatment effects. The policy instrument can improve its efficiency if targeted to small firms and investments that have a link to public good provision. |
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| Keywords: | CAP Investment support Productivity CEM |
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