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After documenting that CAP funds tend to reach regions with high poverty rates and with a high share of a country’s poor, the question of whether CAP has actually contributed to poverty alleviation remains pending. It is worth highlighting that by answering this question, we are in no way trying to evaluate the CAP’s overall performance since, as specified earlier in this paper, the program’s original objective is not related directly to reducing poverty in the areas where it is allocated. Nevertheless, this question is important for further policy recommendations, and more importantly, to assess whether CAP is an instrument that supports the successful structural transformation of a country.

# _Poverty and inequality dynamics and the CAP_

With this in mind, we use panel data to determine the impact, if any, that the CAP has had on poverty rates. Despite heterogeneity in the allocation of the CAP across EU member states, on average a positive impact of the CAP on poverty has been observed. Table 10 documents that total per capita CAP payments are associated with a decrease in the poverty rate over time in the EU. The total per capita payments are further disaggregated into the program pillars to explore potential differences in each pillar’s contribution to poverty alleviation. In the individual analysis, the per capita payments of both pillars remain significant and negative in their association with poverty growth. However, when both pillars are jointly analyzed, it seems that pillar 2 is more significant in its contribution to poverty reduction.

**Table 10.** Per capita CAP payments are linked to regions with higher poverty reduction.

||(1)<br>Povertyrate|(2)<br>Povertyrate|(3)<br>Povertyrate|(4)<br>Povertyrate|(5)<br>Povertyrate|(6)<br>Povertyrate|(7)<br>Povertyrate|(8)<br>Povertyrate|(9)<br>Povertyrate|(10)<br>Povertyrate|(11)<br>Povertyrate|(12)<br>Povertyrate|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Total payments (per capita)|-0.294*|-0.185+|-0.244*||||||||||
|Payments to pillar1 (per capita)||||-0.352*|-0.173|-0.270+||||-0.251|-0.0519|-0.171|
|Payments to pillar2 (per capita)|||||||-0.618*|-0.517*|-0.549*|-0.393+|-0.476*|-0.412+|
|Share of individuals in agricultural households||0.314+|0.235||0.300*|0.216||0.344*|0.251+||0.339*|0.246|
|Share of inhabitants with secondary education||0.00214|0.126||0.0166|0.137+||0.0148|0.175+||0.00786|0.135+|
|Share of inhabitants with tertiary education||-0.137|-0.104||-0.131|-0.0995||-0.130|-0.0838||-0.133|-0.100|
|Unemployment rate||0.420*|||0.429*|||0.470*|||0.454**||
|GDP per inhabitant||-2.791|-4.405||-2.760|-4.288||-3.186|-5.179||-3.090|-4.649|
|Dependency ratio||-0.0620|-0.152+||-0.0443|-0.136||-0.0601|-0.152*||-0.0650|-0.158+|
|Population density||0.00495*|0.00307||0.00617**|0.00433*||0.00445*|0.00302+||0.00428*|0.00260|
|R-Squared:|||||||||||||
|Within|0.387|0.497|0.433|0.367|0.480|0.415|0.359|0.508|0.425|0.388|0.510|0.437|
|Between|0.0586|0.222|0.0453|0.0416|0.213|0.0435|0.0537|0.330|0.0964|0.0663|0.312|0.0588|
|Overall|0.00414|0.283|0.0866|0.00302|0.266|0.0789|0.0427|0.375|0.133|0.00611|0.363|0.103|
|Observations|959|959|959|959|959|959|959|959|959|959|959|959|

Notes: (1) Panel Fixed Effects; All regressions include year fixed effects; (2) Anchored Relative Poverty line (60% of median at 2011); (3) Data Source: Farm Structure Survey, Eurostat; EU-SILC, Eurostat ; (4) Symbols: ** P<0.01, * P<0.05, +P<0.1 In a similar way as with poverty, our analysis also finds a significant impact of the CAP on the dynamics of inequality within regions in the EU. For this purpose, we first draw on the Gini index to measure inequality. Starting with per capita total payments, we find a strong and significant negative effect of such payments on the increase of inequality as measured by the Gini index. When analyzing each of the pillars separately, their individual effects on the decrease in inequality remain significant, particularly for pillar 2. Further disaggregating each of the pillars by their payment components gives no additional information on the particular performance of any of them in terms of inequality. All the results described remain qualitatively similar when we use the Theil index as our measure for inequality.

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