Regional Impacts of Direct Payments on Farm Productivity and Efficiency in the European Union

Abstract

This paper analyses the regional impacts of direct payments on the labour and land productivity of European farms. The basic assumption of the research is that direct CAP subsidies have a positive effect on productivity and efficiency. This was tested by quantitative regression-analysis models, which were based on NUTS2-level regional data from 2008-2018. The results show that direct subsidies have a negative effect on labour and productivity in agriculture, a finding that can be attributed to a number of underlying factors. The direction and magnitude of these productivity effects differ markedly between old and new Member States.