Subsidies and agricultural employment: The education channel

Agricultural employment in industrialized countries has been steadily decreasing despite important levels of farm subsidies. In this paper we provide a new explanation for this puzzle, namely the positive impact of subsidies on the education level of farmers’ children. If farmers are credit constrained, they may underinvest in their children’s education. By increasing farmers’ incomes, subsidies increase investment in education. If more educated children are less willing to become farmers, in the long term subsidies may lead to a reduction of labor supply in the agricultural sector. We provide both theoretical and empirical evidence supporting this argument. Keywords:


Issue Date:
2012
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/126776
Total Pages:
42




 Record created 2017-04-01, last modified 2017-04-26

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