SPS Capitalization into Land Value: Generalized Propensity Score Evidence from the EU
d'Artis Kancs and
LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven
This paper estimates the capitalization of the Single Payment Scheme (SPS) into land values. The theory suggests that the relationship between the SPS and land rents is non-linear and discontinuous, because the SPS impact on land values depends on many factors, such as policy implementation details, market imperfections and institutional regulations. In empirical analysis we employ a unique farm-level panel data set, and apply the generalized propensity score (GPS) matching approach to estimate the capitalization of the SPS. Our results suggest that around 6 percent of the total SPS get capitalized into land rents. On average in the EU, the non-farming landowners' gains from the SPS are only 3 percent. However, there is a large variation in the capitalization rate for different SPS levels, and between Member States (between 0 and 58 percent).
Keywords: decoupled subsidies; capitalization; land market; income distributional effects; selection bias (search for similar items in EconPapers)
JEL-codes: Q12 Q18 (search for similar items in EconPapers)
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Journal Article: Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the European Union (2014)
Working Paper: Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the EU (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:lic:licosd:29311
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