Distributional Effects of CAP Subsidies: Micro Evidence from the EU Report as inadecuate

Distributional Effects of CAP Subsidies: Micro Evidence from the EU - Download this document for free, or read online. Document in PDF available to download.

In this paper we estimate the income distributional effects of the common agricultural policy (CAP) for farmersand landowners. Using a unique farm level panel data set from the FADN for the period 1995-2007 we employthe fixed effects, the Heckman selection bias and the GMM estimators to estimate income distributional effects ofCAP subsidies. The results do not confirm the theoretical hypothesis that landowners benefit a large share of theCAP subsidies. According to our estimates, farmers gain between 60% to 95%, 80% to 178% and 86% to 90% ofthe total value of coupled crop/animal, coupled RDP and decupled payments, respectively. The CAP subsidies areonly marginally capitalised in land rents. Our results suggest that rental rates are more responsive to structuralvariables and show a strong time dependency, suggesting the presence of rigidities in the EU rental markets,which constraint the adjustment of land rents to market signals and thus reduce landowners' gains from the CAP.

Subject(s): Agricultural and Food Policy

Issue Date: 2011

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/114291

Total Pages: 12

Record appears in: European Association of Agricultural Economists (EAAE) > 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland

Author: Ciaian, Pavel ; Kancs, d-Artis ; Gomez y Paloma, Sergio

Source: http://ageconsearch.umn.edu/record/114291?ln=en


Related documents