Promoting change or preserving the status quo? The consequences of dominating local politics by agricultural interests

Though there is a vibrant debate about the determinants of structural change in the agricultural sector, the broad consensus is that it is mainly driven by economic environment and farmers' characteristics. In this paper, we show that the pattern of farm exits can also be importantly shaped by rural politics. Using municipality-level data for Poland and the period 1996-2010, we find a persistent correlation between the outflow from farming and the distribution of political power at the local level. Our results suggest that in municipalities where local governments were captured by agricultural interests there were fewer exits from farming and the land consolidation process was slower. While we cannot rule out that some omitted factors might be responsible for the documented statistical association, our findings are robust across different specifications and to focusing attention on various subsamples.