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CAP Subsidies and Productivity of the EU Farms
Author(s) -
Rizov Marian,
Pokrivcak Jan,
Ciaian Pavel
Publication year - 2013
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/1477-9552.12030
Subject(s) - subsidy , total factor productivity , productivity , european union , economics , common agricultural policy , decoupling (probability) , estimation , agricultural productivity , agriculture , agricultural economics , international economics , international trade , macroeconomics , engineering , market economy , ecology , management , control engineering , biology
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.