Do operating subsidies increase labour productivity in Polish farms?

In the agricultural economics literature, there is a lack of consistent results concerning the relationship between operational subsidies and labour productivity. This premise lay behind the research outlined in this paper, which aims to determine the direction and strength of the relationship between several factors influencing labour productivity, including the subsidy rate index and labour productivity in Polish farms. Special attention has been paid to quantitative evaluation of the effects of subsidies on operational activity. The study was carried out at the farm level, divided into quartile groups defined in terms of labour productivity. The panel data regression method was used to analyse data from Farm Accountancy Data Network for the years 2010-2018. It was found that the factors positively influencing labour productivity in agriculture were capital per employee and utilised agricultural area per employee, while labour productivity was negatively affected by the subsidy rate. In smaller farms where low labour productivity is observed, subsidies for operational activity are an important source of income  generation and consumption financing. The financial surplus in such farms is not high enough to finance farm development. In such cases, subsidies become a factor slowing down processes of farm structural change because farmers are not interested in occupation change.