Garrone, Maria Emmers, Dorien Olper, Alessandro Swinnen, Johan F. M.
Year of Publication:
LICOS Discussion Paper No. 409
Katholieke Universiteit Leuven, LICOS Centre for Institutions and Economic Performance, Leuven
This paper investigates the relationship between EU agricultural subsidies and agricultural labour productivity by estimating a conditional growth equation. 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, CAP subsidies increase agricultural labour productivity, and the effect is almost entirely due to decoupled Pillar I payments. Coupled Pillar I payments have no impact. The impact of Pillar II is mixed.