Do CAP payments reduce farm labour migration? A panel data analysis across EU regions

This paper deals with the determinants of out-farm migration across the European Union (EU) regions focusing on the role played by CAP payments. We add to the existing literature in three main directions. First, our analysis has broad coverage (150 EU regions over the 1990-2009 period); second, we work on the entire portfolio of CAP instruments; third, we rely on modern panel data methods. Results show that standard drivers, such as the relative income and the relative labour share, are important determinants of out-farm migration. Overall, CAP payments significantly contributed to maintain job in agriculture, though the magnitude of the economic effect has been quite moderate and heterogeneous across policy instruments. Pillar I subsidies exerted an effect more than two times greater than that of Pillar II payments.