Will common agricultural policy support save farm employment in the wine sector?

Abstract

ABSTRACT The aim of this paper is to analyze whether different types of Common Agricultural Policy (CAP) subsidies maintained jobs or even created them on wine farms during the years 2013–2019 using a Hungarian Farm Accountancy Data Network panel dataset. Farm employment is separated into paid and unpaid labor. The initial decline in farm employment during the first three years of analysis was due to the decline in paid labor, but later there was rather stable development in both paid and unpaid labor. The dynamic panel regression results confirm that the employment in the previous year is the crucial driver for the employment of labor on wine farms. CAP subsidies for direct payments to farmers and, to a lesser extent, economic farm size, are positively associated with the employment of paid labor (and thus the employment of total wine farms-related labor), but not with employment of unpaid labor, and vice versa rented land share. These results and findings are robust independent of year-fixed effects. While CAP subsidies for direct payments to farmers supported the maintenance or increase in paid labor employment on wine farms, trade-offs arose regarding the efficiency of wine farms and their entrepreneurial-, innovation-, and market-added value-chain efforts.