Negotiating Reductions in Agricultural Support: Implications of Technology and Factor Mobility

Abstract

AbstractThis paper highlights the joint significance of agricultural technology and factor mobility in determining the impact of changing support policies. The impact of across‐the‐board reductions in farm support on output, exports, employment, and land values will vary systematically across countries, depending on their relative reliance on export, output, and input subsidies. Furthermore, considerable maneuvering room exists, even after an aggregate reduction in support is agreed upon. For example, the aggregate U.S. producer subsidy equivalent could be reduced, while leaving unchanged the demand for farm labor, by shifting the mix of remaining subsidies toward inputs which are complementary with labor.