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20. Januar 2011Der Effekt von Direktzahlungen auf die Einkommensverteilung1 122 nd EAAE-Seminar February 17 th 1Evidence-Based Agricultural and Rural Policy.

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Presentation on theme: "20. Januar 2011Der Effekt von Direktzahlungen auf die Einkommensverteilung1 122 nd EAAE-Seminar February 17 th 1Evidence-Based Agricultural and Rural Policy."— Presentation transcript:

1 20. Januar 2011Der Effekt von Direktzahlungen auf die Einkommensverteilung1 122 nd EAAE-Seminar February 17 th 1Evidence-Based Agricultural and Rural Policy Making Distributional Effects of Direct Payments in Switzerland Paper presented at the 122 nd EAAE-Seminar in Ancona/Italy, 17 th -19 th February 2011 by Nadja El Benni El Benni, N., Mann, S., Lehmann, B. (2011): Distributional effects of direct payments in Switzerland, Paper presented at the 122nd EAAE Seminar, European Association of Agricultural Economists, February 17-18, 2011, Ancona, Italy.

2 11. November 2010Modul I – Forschungsfrage 1.22 Pre-reform -Farm household based support for farmers facing adverse production conditions First reform Introduction of area-based Direct Payments -Introduction of the first ecological direct payment program (IP) Second reform Abandonment of farm household based payments -All direct payments are based on a cross-compliance approach (IP became obligatory) 2 Agricultural policy changes in Switzerland 122 nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making Research question: How agricultural policy changes affected the income distribution within the Swiss farm population? Market support Focus on income level, what are the distributive effects

3 20. Januar 2011Der Effekt von Direktzahlungen auf die Einkommensverteilung3 Method 3 Gini coefficientPseudo-Gini coefficientGini elasticity How concentrated is the income within the population? How concentrated is the income from a specific income source with regard to the distribution of total household income ? On how much the Gini coefficient changes if the income from one specific source is increased by 1%? 0 = total equally distributed 1 = 1 household receives all of the income ) 0 the income from source k is mainly given to low (high) income farmers ) 0 increasing the income from source k by 1% decreases (increases) the Gini coefficient by x% 122 nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making cov: Covariancey: IncomeF(Y): Cumulative distribution functionµ: Mean income Stuart (1995)Lerman and Yitzhaki (1985)

4 20. Januar 2011Der Effekt von Direktzahlungen auf die Einkommensverteilung4 FADN data 1990 – 2009: weighted and trimmed 4 Data Number of observations per year MeanMinimumMaximum Sample Population nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making

5 20. Januar 2011Der Effekt von Direktzahlungen auf die Einkommensverteilung5 Gini coefficients How concentrated is the income within the population? A B A - Introduction of area- based payments B - Cross-compliance - Abandonment of farm household payments 122 nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making

6 6 How concentrated is the income from a specific income source with respect to the distribution of total household income ? Pseudo – Gini coefficients nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making

7 7 On how much the Gini coefficient changes if the income from one specific source is increased by 1%? Gini elasticities nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making

8 Summary and conclusion (I) The effect of farm and off-farm income on total household income distribution: -Total household income is rather equally distributed within the Swiss farm population and did not change over time (1990: 0.21, 2009: 0.23) -Farm income is less equally distributed compared to total household income and inequality increased over time (1990: 0.27, 2009: 0.38)  off-farm income decreases household income inequality -Off-farm income is unequally distributed but with decreasing trend  differences in off-farm employment opportunities  an increasing number of farmers rely on off-farm income -Compared to other countries farm income is rather equally distributed within the Swiss farm population  Irland 1996: 0.62 (Keeney, 2000)  USA 1991: 0.64 (El-Osta et al., 1995)  Germany 2005: 0.54 (Von Witzke and Noleppa, 2007)  Swiss agriculture structure: small-scaled (~17ha) no big and highly efficient farms 8122 nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making

9 Summary and conclusion (II) The effect of direct payments on total household income distribution: -Since the introduction of area-based direct payments (1992), direct payments are more equally distributed. -Since direct payments are based on a cross-compliance and farm specific supports were abandoned (1999), direct payments became less equally distributed.  farm specific (income goals)  area-based (national level income goals)  cross-compliance and income goals?! -Direct payments are increasingly distributed to farmers with in average higher household income levels  to a certain extent the distributional effects of market support policies are transferred to the “new” agricultural policy based on “decoupled” direct payments  the high share of direct payments on household income increases the responsibility of policy makers regarding the income distribution! 9122 nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making

10 Thanks for your attention Discussion…Questions… 10

11 20. Januar 2011Der Effekt von Direktzahlungen auf die Einkommensverteilung11 References El-Osta H.S., Bernat, A., Ahearn, M.C. (1995): Regional Differences in the Contribution of Off-Farm Work to Income Inequality, Agricultural and Resource Economics Review 24(1), pp Keeney, M. (2000): The Distributional Impact of Direct Payments on Irish Farm Incomes, Journal of Agricultural Economics 51(2), pp Lerman, R.,I., Yitzhaki, S. (1985): Income Inequality Effects by Income Source: A New Approach and Applications to the United States, The Review of Economics and Statistics 67(1), pp Stuart, A. (1954): The Correlation Between Variate-Values and Ranks in Samples from a Continuous Distribution, British Journal of Statistical Psychology 7, pp Von Witzke, H., Noleppa, S. (2007): Agricultural and Trade Policy Reform and Inequality: The Distributive Effects of Direct Payments to German Farmers under the EU`s New Common Agricultural Policy, Working Paper Nr. 79/2007, Humboldt- University Berlin nd EAAE-Seminar February 17 th Evidence-Based Agricultural and Rural Policy Making


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