Geographical indications and farm economic performance: evidence from wine farms in Spain

Abstract

Geographical indications (GIs) are increasingly promoted as rural development instrument, yet how they reshape farm-level economic activity remains poorly understood at population scale. This study examines the farm-level economic effects of GI wine designation, asking whether it shifts farms towards value-added production, reallocates labour, and stimulates diversification into downstream activities. Using the Spanish Agricultural Census 2020, we examine farms holding wine GI designations, employing multivariate regression, propensity score matching, and a descriptive mediation decomposition. Since GI status is not randomly assigned and the data are cross-sectional, we interpret the estimates as conditional associations rather than causal effects. The analysis yields three main results. Wine GI designation is associated with substantially higher production value relative to comparable non-GI farms, consistent with a shift towards quality-differentiated production. GI farms also diversify more into downstream activities; an effect concentrated in agricultural processing rather than tourism and indicative of vertical integration. Total employment differences, however, are statistically indistinguishable from zero once production scale is held constant. Rather than creating jobs, GI designation reallocates labour towards family workers and away from hired labour, operating almost entirely through production-scale expansion. These patterns suggest that Spanish wine GIs function primarily to raise value-added production and reorganize labour.

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