The Impact of CAP Payments on the Exodus of Labour from Agriculture in Selected EU Member States

This paper examines the determinants of exit from agriculture under the implementation of CAP payments in four selected EU countries (France, Hungary, Italy and Poland) in the period 2005-08. The main results suggest that total subsidies at the regional level reduce the out-farm migration of agricultural workers in the two New Member States, Hungary and Poland. Conversely, the non-significant results for the ‘old’ Member States may be interpreted as the result of opposing effects of coupled payments and rural development support. The diverse impact of CAP on the likelihood of leaving agriculture in the four countries reflects the heterogeneity across European Member States, which does not allow a common and simple generalisation of the effect of the CAP on labour allocation.