Opportunities and challenges in the area of employment, social affairs, skills and labour mobility. EPC Commentary, 30 September 2014

On 1 October 2014, Marianne Thyssen, Commissioner-designate for Employment, Social Affairs, Skills and Labour Mobility, will face a European Parliament (EP) hearing. On this occasion, Thyssen will have to perform a delicate balancing act consisting of on the one hand, taking into consideration the significant budget constraints that a number of Member States are still facing and following the still prevailing political line of fiscal consolidation and sound public finances, and on the other hand, of demonstrating her strong commitment for Social Europe. In the context of the upcoming hearing, this commentary aims to outline the features, opportunities and challenges of the new portfolio related to employment and social affairs in view to providing an input into the political debate.

Do agricultural subsidies crowd out or stimulate rural credit institutions? The Case of CAP Payments. Factor Markets Working Paper No. 4, September 2011

In this paper we estimate the impact of subsidies from the EU’s common agricultural policy on farm bank loans. According to the theoretical results, if subsidies are paid at the beginning of the growing season they may reduce bank loans, whereas if they are paid at the end of the season they increase bank loans, but these results are conditional on whether farms are credit constrained and on the relative cost of internal and external financing. In the empirical analysis, we use farm-level panel data from the Farm Accountancy Data Network to test the theoretical predictions for the period 1995–2007. We employ fixed-effects and generalised method of moment models to estimate the impact of subsidies on farm loans. The results suggest that subsidies influence farm loans and the effects tend to be non-linear and indirect. The results also indicate that both coupled and decoupled subsidies stimulate long-term loans, but the long-term loans of large farms increase more than those of small farms, owing to decoupled subsidies. Furthermore, the results imply that short-term loans are affected only by decoupled subsidies, and they are altered by decoupled subsidies more for small farms than for large farms; however, when controlling for endogeneity, only the decoupled payments affect loans and the relationship is non-linear.