Home Economics Disaggregated impacts of CAP reforms : proceedings of an OECD workshop.
Input-output analysis: economic and employment effects
Finally, an attempt was made to translate the output and input change in the farming sector into total output and employment change at the regional level encompassing the whole economy. In this particular analysis, I-O is applied to represent structural rural economic relations and to examine impacts in terms of output, household income and employment which result from CAP changes. A hybrid regional I-O model was constructed, applying the GRIT regionalization technique for all case study regions, offering the opportunity to compare the structure and dynamics of their economies.
A careful inspection of the case study regional I-O tables reveals some profound differences in the structure of the regional economy, which are reflected more clearly when I-O multipliers are calculated. The importance of similar sectors and their dynamics (reflected in terms of multiplier size) varies substantially among case study regions; such significant differences raise important issues for the design of RDPs. Sectoral diversity among case study regions demands flexibility in Pillar 2 programmes in order to effectively improve regional economic prospects. Table 14.6 illustrates such diversities by depicting the employment multipliers for five sectors. It is clear that employment- stimulating sectors vary significantly among regions.
Table 14.6. Employment multipliers
Rasmussen and Hirschman Linkage Coefficients
a. Rasmussen and Hirschman Linkage Coefficients demonstrate the direct and indirect backward linkages of the economic sectors. In parentheses is given the rank order in terms of the magnitude of the employment multipliers.
The potential impact of CAP reforms was evaluated utilizing information from the PMP model related to crop and livestock production changes. Feeding the results of scenario S2 into the I-O structure, the total (output, income and employment) effects were estimated as miniscule (Table 14.7). In particular, decoupling causes only minor losses to the regional economies in terms of output, income and employment.
Table 14.7. Total output, employment and household income impacts in the regions:
In addition, the potential impacts of Pillar 2 measures were evaluated for the specific case of the Greek region. Implementation of these measures stimulates regional economies as they cause significant fund inflows to rural development activities that finally generate output, income and employment for the whole region (Table 14.8). Thus, Pillar 2 measures transmit employment benefits beyond the farm sector, causing substantial effects in other economic sectors. This tends to justify the general trend, followed by the Health Check, to shift funds from Pillar 1 to Pillar 2. Hopefully, the structural change caused by the shift will generate permanent employment benefits for the economy.
Table 14.8. Output, income and employment impacts due to RDP
The Greek case
a. Shares (%) show contributions to current regional total output, employment and household income.
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