Journal
JOURNAL OF AGRICULTURAL ECONOMICS
Volume 64, Issue 3, Pages 537-557Publisher
WILEY
DOI: 10.1111/1477-9552.12030
Keywords
CAP subsidies; investment; productivity; micro data; EU farms
Categories
Funding
- European Commission
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The paper investigates the impact of the Common Agricultural Policy (CAP) subsidies on farm total factor productivity (TFP) in the European Union (EU). We employ a structural semi-parametric estimation algorithm directly incorporating the effect of subsidies into a model of unobserved productivity. We empirically study the effects using the Farm Accountancy Data Network (FADN) samples for the EU-15 countries. Our main findings are clear: subsidies impact negatively on farm productivity in the period before the decoupling reform was implemented; after decoupling the effect of subsidies on productivity is more nuanced and in several countries it turned positive.
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