  We assess the correlation between CAP support provided to farmers and their
income and use of capital and labour in the first year of the new CAP regime.
This is done applying three regression models on the Italian FADN farms
controlling for other farm characteristics. CAP annual payments are positively
correlated with farm income and capital but are negatively correlated with
labour use. Farm investment support provided by RDP measures is positively
correlated to the amount of capital. Results suggest that CAP is positively
affecting farm income directly but also indirectly by supporting the
substitution of labour with capital
