Distributional effects of CAP liberalisation on western German farm incomes: an ex-ante analysis

Andre Deppermann, Harald Grethe and Frank Offermann

European Review of Agricultural Economics, 2014, vol. 41, issue 4, 605-626

Abstract: We measure impacts of liberalising European agriculture on farm income distribution in western Germany. Unlike previous studies, we do not treat market income and policy support as independent income sources. We jointly apply a partial equilibrium and a programming model and find that liberalisation increases inequality in relative terms though it decreases inequality in absolute terms. In particular, we analyse the relevance of taking into account policy-induced production and market responses in an ex-ante inequality analysis. We find that although their inclusion generally does not affect the direction of distributional effects, it may have considerable impact on their magnitude.

Date: 2014
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