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Does the Decoupling Reform Affect Agricultural Employment in Sweden? Evidence from an Exogenous Change

Nordin, Martin LU (2014) In Journal of Agricultural Economics 65(3). p.616-636
Abstract
This study uses aggregated municipality data, for the years 2001-2009, to explore whether direct payments to farmers affect agricultural employment in Swedish municipalities. The decoupling reform in 2005 included a new grassland support payment accompanied by management obligations that had unexpectedly high redistributive consequences as it greatly increased common agricultural policy payments to municipalities with large areas of grassland. In some municipalities, total payments more than doubled. Thus, since the reform seems exogenous to the behaviour of farmers and the regional economy, the reform can be used to identify a subsidy effect. We find that a permanent increase in agricultural employment can be attributed to the new... (More)
This study uses aggregated municipality data, for the years 2001-2009, to explore whether direct payments to farmers affect agricultural employment in Swedish municipalities. The decoupling reform in 2005 included a new grassland support payment accompanied by management obligations that had unexpectedly high redistributive consequences as it greatly increased common agricultural policy payments to municipalities with large areas of grassland. In some municipalities, total payments more than doubled. Thus, since the reform seems exogenous to the behaviour of farmers and the regional economy, the reform can be used to identify a subsidy effect. We find that a permanent increase in agricultural employment can be attributed to the new grassland support. Our results indicate that the grassland support generates an additional job at a cost of SEK 250,000, relative to the average agricultural wage of SEK 333,000. However, the subsidy effect is largely keeping jobs in agriculture, i.e. the grassland support may be slowing down the process of structural change in grassland regions. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
subsidies, Agriculture, employment effect, single farm payment, common, agricultural policy, EU
in
Journal of Agricultural Economics
volume
65
issue
3
pages
616 - 636
publisher
Wiley-Blackwell
external identifiers
  • wos:000340533200005
  • scopus:84906311444
ISSN
1477-9552
DOI
10.1111/1477-9552.12052
language
English
LU publication?
yes
id
ddb1fe90-d5af-4ef6-b196-57e3332aa645 (old id 4180128)
date added to LUP
2016-04-01 10:20:28
date last changed
2023-11-09 18:21:55
@article{ddb1fe90-d5af-4ef6-b196-57e3332aa645,
  abstract     = {{This study uses aggregated municipality data, for the years 2001-2009, to explore whether direct payments to farmers affect agricultural employment in Swedish municipalities. The decoupling reform in 2005 included a new grassland support payment accompanied by management obligations that had unexpectedly high redistributive consequences as it greatly increased common agricultural policy payments to municipalities with large areas of grassland. In some municipalities, total payments more than doubled. Thus, since the reform seems exogenous to the behaviour of farmers and the regional economy, the reform can be used to identify a subsidy effect. We find that a permanent increase in agricultural employment can be attributed to the new grassland support. Our results indicate that the grassland support generates an additional job at a cost of SEK 250,000, relative to the average agricultural wage of SEK 333,000. However, the subsidy effect is largely keeping jobs in agriculture, i.e. the grassland support may be slowing down the process of structural change in grassland regions.}},
  author       = {{Nordin, Martin}},
  issn         = {{1477-9552}},
  keywords     = {{subsidies; Agriculture; employment effect; single farm payment; common; agricultural policy; EU}},
  language     = {{eng}},
  number       = {{3}},
  pages        = {{616--636}},
  publisher    = {{Wiley-Blackwell}},
  series       = {{Journal of Agricultural Economics}},
  title        = {{Does the Decoupling Reform Affect Agricultural Employment in Sweden? Evidence from an Exogenous Change}},
  url          = {{http://dx.doi.org/10.1111/1477-9552.12052}},
  doi          = {{10.1111/1477-9552.12052}},
  volume       = {{65}},
  year         = {{2014}},
}