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Accounting for farm heterogeneity in the assessment of agricultural policy impacts on structural change

Legrand Saint-Cyr

No 235778, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: This study aims at investigating the impact of agricultural policies on structural change process in the French farming sector. As farms may behave differently, a mixture modeling approach is applied in order to account for unobserved farm heterogeneity. A multinomial logit specification is used for the transition probabilities and the parameters of the model are estimated by maximum likelihood method using the expectation-maximization (EM) algorithm. An empirical application to an unbalanced panel over 2000-2013 shows that the French farming sector consists of a mixture of two types of farms with transition processes very different. The results also show that the impact of subsidies from the First and the Second Pillars of the Common Agricultural policy (CAP) depends on the type membership of farms. I thus argued that agricultural policy assessment should pay more attention on potential unobserved heterogeneity in farms’ behavior.

Keywords: Agricultural and Food Policy; Farm Management; Research Methods/ Statistical Methods (search for similar items in EconPapers)
Pages: 47
Date: 2016
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:235778

DOI: 10.22004/ag.econ.235778

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