Jobs and agricultural policy: Impact of the common agricultural policy on EU agricultural employment |
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| Affiliation: | 1. LICOS Centre for Institution and Economic Performance & Department of Economics, KU Leuven, Belgium;2. Department of Environmental Science and Policy, University of Milan, Italy;3. CEPS Centre for European Policy Studies, Belgium;4. Higher School of Economics, Russia;1. Financial Stability Division, Central Bank of Ireland, Spencer Dock, Dublin 1, Ireland;2. Teagasc Rural Economy and Development Programme, Athenry, Co. Galway, Ireland;1. College of Economics & Management, Guangdong Center for Rural Economic Studies, South China Agricultural University, Guangzhou, 510642, PR China;2. Morrison School of Agribusiness, W.P. Carey School of Business, Arizona State University, AZ, 85212, USA;1. INRAE (Institut national de recherche pour l’agriculture, l’alimentation et l’environnement), SMART-LERECO, 4 allée Adolphe Bobierre, 35000 Rennes, France;2. RFF-CMCC European Institute on Economics and the Environment (EIEE), Centro Euro-Mediterraneo sui Cambiamenti Climatici, Via Bergognone 34, 20144 Milano, Italy |
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| 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. 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 predict that an increase of 10 percent of the CAP budget would prevent an extra 16,000 people from leaving the EU agriculture sector each year. A 10 percent decoupling would save 13,000 agricultural jobs each year. However, the budgetary costs are large. The estimated cost is more than € 300,000 per year (or more than € 25,000 per month) per job saved in agriculture. |
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| Keywords: | Agricultural employment Agricultural subsidies Off-farm migration Panel data analysis Q12 Q18 O13 J21 J43 J60 |
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