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The Capitalization of Area Payment into Land Rental Prices: Micro-evidence from Italy

Daniele Moro, Gianni Guastella (), Paolo Sckokai () and Mario Veneziani ()

No 149746, 2013 Second Congress, June 6-7, 2013, Parma, Italy from Italian Association of Agricultural and Applied Economics (AIEAA)

Abstract: This paper analyses the extent to which agricultural subsidies are capitalised into land rental price. By using Italian data at the farm level the analysis proposed in this paper innovates with respect to existing studies in different ways. Thanks to the long time span available in the FADN database it is possible to compare the two time periods, before and after the 2005 CAP reform, to test whether any change occurred as a result of the introduction of the decoupled payments scheme. In contrast to previous empirical literature, which has either focused on the unobserved farm-level heterogeneity issue or on the selectivity issue, the method proposed in this paper accounts for both simultaneously. Finally, the same method is extended to account for endogeneity of some covariates. Overall, the results in the paper confirm previous evidence, rejecting the hypothesis that agricultural payments are capitalized into land prices in both periods.

Keywords: Land; Economics/Use (search for similar items in EconPapers)
Pages: 11
Date: 2013-06
New Economics Papers: this item is included in nep-agr and nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aiea13:149746

DOI: 10.22004/ag.econ.149746

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