Subsidies and agricultural productivity in the EU

This paper investigates the relationship between EU agricultural subsidies and agricultural labor productivity growth by estimating a conditional convergence growth model. We use more representative subsidy indicators and a wider coverage (panel data from 213 EU regions over the period 2004–2014) th...

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Bibliographic Details
Published inAgricultural economics Vol. 50; no. 6; pp. 803 - 817
Main Authors Garrone, Maria, Emmers, Dorien, Lee, Hyejin, Olper, Alessandro, Swinnen, Johan
Format Journal Article
LanguageEnglish
Published Malden Wiley Subscription Services, Inc 01.11.2019
Subjects
agricultural labor productivity
Agricultural policy
Agricultural subsidies
Common Agricultural Policy
conditional convergence growth model
Economic models
Growth models
Heterogeneity
J24
Labor
Labor economics
Labor productivity
Longitudinal studies
O13
panel data analysis
Q10
Q18
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Summary:This paper investigates the relationship between EU agricultural subsidies and agricultural labor productivity growth by estimating a conditional convergence growth model. We use more representative subsidy indicators and a wider coverage (panel data from 213 EU regions over the period 2004–2014) than have been used before. We find that, on average, EU's Common Agricultural Policy (CAP) subsidies increase agricultural labor productivity growth, but this aggregate effect hides important heterogeneity of effects of different types of subsidies. The positive effect on productivity comes from decoupled subsidies, that is, Pillar I decoupled payments and some Pillar II payments. Coupled Pillar I subsidies have the opposite effect: they slow down productivity growth.
ISSN:0169-5150
1574-0862
DOI:10.1111/agec.12526