Working Paper No. 1129

The Local Impacts of Agricultural Subsidies: Evidence from the Canadian Prairies

Published: June 27, 2016Pages: 45Keywords: Agricultural Trade Liberalization; Export Subsidy; Market Access; SpilloversJEL-codes: F14; O13; Q16; Q17; Q18

The Local Impacts of Agricultural Subsidies: Evidence from the Canadian Prairies Ray Bollman and Shon Ferguson


We estimate the impact of the removal of a railway transportation subsidy on the local economies of Alberta, Saskatchewan and Manitoba, exploiting the large regional variation in these one-time freight rate increases. We find that higher freight rates – and hence lower farm gate prices – resulted in significantly lower farm revenues, farm asset values and farm numbers. Local employment in non-agricultural sectors systematically declined in areas that were hardest hit by the subsidy removal. The results suggest that the subsidy removal had detrimental spillover effects on local non-agricultural economy that are much larger than standard input-output models would predict.

Shon Ferguson

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An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

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The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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