Farm heterogeneity and agricultural policy impacts on size dynamics: evidence from France

Legrand D. F Saint-Cyr

No 17-04, Working Papers SMART from INRAE UMR SMART

Abstract: This article investigates the impact of agricultural policies on structural change in farming. Since not all farmers may behave alike, a non-stationary mixed-Markov chain modeling (M-MCM) approach is applied to capture unobserved heterogeneity in the transition process of farms. A multinomial logit specification is used for transition probabilities and the parameters are estimated by the maximum likelihood method and the Expectation-Maximization (EM) algorithm. An empirical application to an unbalanced panel dataset from 2000 to 2013 shows that French farming mainly consists of a mixture of two farm types characterized by specific transition processes. The main finding is that the impact of farm subsidies from both pillars of the Common Agricultural Policy (CAP) highly depends on the farm type. A comparison between the non-stationary M-MCM and a homogeneous non-stationary MCM shows that the latter model leads to either overestimation or underestimation of the impact of agricultural policy on change in farm size. This suggests that more attention should be paid to both observed and unobserved farm heterogeneity in assessing the impact of agricultural policy on structural change in farming.

Keywords: agricultural policy; EM algorithm; farm structural change; mixed-Markov chain model; multinomial logit; unobserved heterogeneity (search for similar items in EconPapers)
JEL-codes: C38 C51 Q12 Q18 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017
New Economics Papers: this item is included in nep-agr, nep-dcm, nep-ecm and nep-eur
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.tind.io/record/258013/files/wp17-04.pdf (application/pdf)

Related works:
Working Paper: Farm heterogeneity and agricultural policy impacts on size dynamics: evidence from France (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rae:wpaper:201704

Access Statistics for this paper

More papers in Working Papers SMART from INRAE UMR SMART Contact information at EDIRC.
Bibliographic data for series maintained by Anne Chauvel ().