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The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy
Author(s) -
Biagini Luigi,
Antonioli Federico,
Severini Simone
Publication year - 2020
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/1477-9552.12383
Subject(s) - endogeneity , subsidy , common agricultural policy , panel data , economics , agriculture , transfer payment , direct payments , agricultural policy , farm income , simultaneity , income support , payment , agricultural economics , comprehensive income , public economics , gross income , european union , econometrics , economic policy , finance , production (economics) , macroeconomics , geography , classical mechanics , market economy , welfare , state income tax , physics , tax reform , archaeology
As a multi‐objective policy, the EU Common Agricultural Policy continues to secure significant income support for farmers as one of the nine specific objectives. We estimate the income transfer efficiency of a broad set of pivotal policy measures, focusing on the effects of farm structure on income transfer efficiency. We use dynamic modelling, based on a micro‐data panel of Italian farms for the period 2008–2014, allowing for endogeneity, simultaneity bias, and omitted variables. In line with previous studies and economic expectations, we find that decoupled direct payments provide the highest contribution to agricultural incomes, followed by agri‐environmental payments and on‐farm investment subsidies. Coupled payments have no significant impacts on farmers’ income. Generally, for all analysed Common Agricultural Policy measures, large farms benefit from greater transfer efficiency levels compared with medium and small farms. These differences among instruments and across farms suggest that policy‐participation costs may play a pivotal role, together with the economic structure of farms, in determining the income transfer efficiency of CAP policies.