Ex-post impact of first- and second-pillar CAP payments on farm structural change

Abstract

The EU has seen a steady decline in farm numbers and agricultural labour, alongside an aging farming population. The present paper uses a non-stationary Markov chain model approach, estimated from farm level FADN data, to assess the impact of first- and second-pillar CAP payments on farm structure and employment in France over the 2004-2021 period. Farms are categorised into five economic size classes measured in euros of standard output. Results indicate that increasing either type of subsidies would have a positive effect on agricultural employment, primarily by supporting labour in farms of smaller economic size. However, the overall employment impact is positive but modest. The relative impact of first-pillar payments appears stronger, but second-pillar payments are more cost-effective per euro spent. The proposed farm-level approach will be extended to other EU member states to test the robustness and consistency of these findings, and avenues for future research are discussed.

Funding acknowledgement

Funded by the European Union. Grant Agreement No. 101060075. Views and opinions expressed are those of the authors only and do not necessarily reflect those of the European Union or the European Commission. Neither the European Union nor the granting authority can be held responsible for them.
UK Research and Innovation Project Code: 10047415 https://gtr.ukri.org/projects?ref=10047415

Citation

Piet, L. (2026). Ex-post impact of first- and second-pillar CAP payments on farm structural change. BrightSpace Working Paper. BrightSpace Horizon Europe project, GA Nr. 101060075.

Legal notice

This document was produced under the terms and conditions of Grant Agreement No. 101060075 for the European Commission. It does not necessary reflect the view of the European Union and in no way anticipates the Commission’s future policy in this area. The European Commission is not liable for any consequence stemming from the reuse of this publication.

© BrightSpace, 2026

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Project information

BrightSpace Horizon Europe project Grant Agreement No. 101060075 https://cordis.europa.eu/project/id/101060075 CALL: Innovative governance, environmental observations and digital solutions in support of the Green Deal WORK PROGRAMME Topic ID: HORIZON-CL6-2021-GOVERNANCE-01-12 EU agriculture within a safe and just operating space and planetary boundaries

BrightSpace Project coordination: Wageningen Economic Research, The Hague, NL Contact: brightspace.wser@wur.nl | Website: www.brightspace-project.eu

Project duration: 1 November 2022 – 31 October 2027