Can a long-term economic subsidy counteract rural depopulation? An empirical analysis from two spanish regions

Rural depopulation in advanced economies has negative economic consequences for local communities and requires effective policies at different spatio-temporal and governance scales. Since the 1980s, an economic subsidy (Rural Employment Plan, PER-PFEA) was implemented at municipality scale in two autonomous communities of Spain (Andalusia and Extremadura) with the aim at improving the economic performances and counteracting depopulation. Within this national plan, each municipality requests and receives funds for improving the labour conditions of temporary agricultural workers. Long-term implementation of the PER-PFEA programme allows assessment of the effectiveness of this subsidy scheme in containing depopulation. The present study classifies municipalities in the two Spanish regions according to their demographic dynamics over a decade (2002 − 2012) and their capacity to attract public funds from the plan. A threshold value based on logistic probabilities was estimated to assess its success in counteracting depopulation. Results identified four municipal profiles. On the one hand, subsidy application reduced depopulation probability in 23.3% and 8.4% of Andalusia and Extremadura municipalities, respectively. On the other hand, given the low level of requested funds, the programme did not reduce depopulation in 26.3% and 61.8% of Andalusia and Extremadura municipalities with a stagnant economy based on silviculture and livestock. While requesting few funds, 36.9% and 16.7% of municipalities exhibited population growth and a dynamic economic base. Finally, despite a large provision of funds, the subsidy seemed to have not reduced depopulation probability in 13.5% and 13.1% of municipalities, representing the most problematic contexts because of population shrinkage and economic backwardness. The study finally discusses some proposals for future improvements of the subsidy provision system.