LABOUR PRODUCTIVITY EFFECTS OF INVESTMENT SUPPORT FROM THE COMMON AGRICULTURAL POLICY IN POLAND

The European Union puts particular emphasis on regional and national competitiveness due to its importance for the economic growth. Hence, one of the main objective of agricultural policy is to improve the economic situation of farms. This goal can be achieved by support instruments, which ensure increase in the competitiveness and productivity of farm. The paper studies the effect of support for investments from the Rural Development Programme (RDP) under the second pillar of the Common Agricultural Policy (CAP), on an increase in labour productivity on the Polish farms. Labour productivity is defined as gross value added per annual work unit (GVA/AWU). Two types of operations under the RDP 2014-2020 are studied: "Modernisation of agricultural holdings" (sub-measure 4.1) and "Premiums for young farmers" (sub-measure 6.1). Co-financing of investments in technical equipment should lead to an increase in gross value added and thus a growth in labour productivity. We estimated the average treatment effect of analysed subsidy by comparing the group of beneficiaries to the control group of farms with similar distributional characteristics as the treatment group. The Propensity Score Matching method is used to estimate matched control group and handle selection bias. The study uses data from the Polish FADN (Farm Accountancy Data Network) regarding over 3,000 individual farms.