The capitalization of area payments into land rental prices: a panel sample selection approach
2017
Guastella, Gianni | Moro, Daniele | Sckokai, Paolo | Veneziani, Mario
Previous empirical literature suggests that agricultural subsidies are capitalized intofarmland rents and that the introduction of the 2003 decoupling reform of the EU CommonAgricultural Policy, attaching the subsidy to land only, might have even extended thephenomenon of capitalization. Employing the FADN dataset for Italy we investigate thisissue using methodologies accounting for selectivity, endogeneity and individualheterogeneity simultaneously. The evidence suggests that selectivity bias causesinconsistent estimation of parameters and wrong inference. Results reveal instead that, inItaly, there is no incidence of both coupled and decoupled payments.
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