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Do the CAP Subsidies Increase Employment in Sweden? Estimating the Open Economy Relative Multiplier Using an Exogenous Change in the CAP

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  • Blomquist, Johan
  • Nordin, Martin

Abstract

This study evaluates the impact of agricultural subsidies (CAP) on unemployment and employment outside the agricultural sector. For the CAP subsidies to have an effect outside the agricultural sector, the subsidies must have a second-order effect. Thus, the Open Economy Relative Multiplier for Sweden is estimated with aggregate municipality data for the years 2001 to 2009. A side-effect of the decupling reform in 2005 was that Sweden was forced to introduce a grassland support which redistributed the payments among the regions. This exogenous redistribution of the CAP is the identifying assumption in this study. The subsidy creates private jobs at a cost of about $20,000 per job, which is consistent with earlier estimates based on US data.

Suggested Citation

  • Blomquist, Johan & Nordin, Martin, 2014. "Do the CAP Subsidies Increase Employment in Sweden? Estimating the Open Economy Relative Multiplier Using an Exogenous Change in the CAP," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182814, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae14:182814
    DOI: 10.22004/ag.econ.182814
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    Cited by:

    1. Rizov, Marian & Davidova, Sophia & Bailey, Alastair, 2019. "Employment effects of CAP payments in the UK non-farm economy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 147-161.
    2. Davidova, Sophia & Hennessy, Thia & Thomson, Ken, 2016. "Rural Jobs and the CAP: Spitting into the Wind?," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236364, Agricultural Economics Society.
    3. Blomquist , Johan & Nordin, Martin, 2013. "Do the CAP Subsidies Increase Employment in Sweden? Estimating the Open Economy Relative Multiplier Using an Exogenous Change in the CAP," Working Papers 2013:41, Lund University, Department of Economics.
    4. Sophia Davidova & Kenneth Thomson, 2017. "The CAP and Rural Jobs," EuroChoices, The Agricultural Economics Society, vol. 16(3), pages 3-3, December.

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    More about this item

    Keywords

    Agricultural and Food Policy; Labor and Human Capital;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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