Subsidies and Employment: Exploring the experience of corporate and family farms in Russia

Abstract

The paper investigates whether agricultural enterprises and the family farm sector respond differently to agricultural subsidies in respect of agricultural employment. Results show that investment subsidies work in a conventional capital - labour substitution framework reducing employment in the sector to which they are applied but indirectly increasing employment in the alternative agricultural sector. Production subsidies increase employment in the family sector characterised by low labour elasticity, but reduce it in the more labour elastic enterprises sector. The remaining covariates have opposing signs in the two models, indicating a qualitative difference between the agricultural enterprises and the family sector.