CAP subsidies and productivity of the EU farms

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.

This is the peer reviewed version of the following article: Rizov, M. , Pokrivcak, J. and Ciaian, P. (2013), CAP Subsidies and Productivity of the EU Farms. J Agric Econ, 64: 537-557. doi:10.1111/1477-9552.12030, which has been published in final form at https://doi.org/10.1111/1477-9552.12030. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.