Special Study: The Importance of Territorial Diversity: Employment Effects of the CAP’s Pillars 1 and 2 in Rural Areas in Italy

Several recent studies have dealt with the Common Agricultural Policy’s (CAP’s) impacts on employment in agriculture. Most show that generally the effects of Pillar 1 are negative for both family and hired labor. Employment effects of Pillar 2 Rural Development Plan (RDP) measures seem more controversial. In this chapter, the CAP’s impact on agricultural employment in three types of area (Urban, Intermediate and Peripheral) is evaluated in terms of the following: (a) farm structure and socio-economic context (land area and productivity, incomes and immigration); (b) various types of CAP expenditures. The results suggest that structural and context variables contribute to changes in farm employment more than policy measures. Amongst the latter, Pillar 1 income payments to farmers appear to have affected farm employment negatively in most areas, perhaps due to the introduction of activities requiring lower labor input, or to risk-averse behavior by farmers. The Pillar 2 RDP measures all showed positive effects, but not always statistically significant. These RDP effects differ according to measure type: farm and agro-industrial investment support generates higher employment effects than other types of support. In some cases, investment in rural diversification also contributes to farm employment.