Explaining the impact of public subsidies on farm technical efficiency: Analytical challenges and Bayesian meta-analysis
2013
Minviel, Jean Joseph | Latruffe, Laure
In this paper, we contribute to the literature studying the link between public subsidies and farm technical efficiency. We firstly provide a critical review of the few and limited existing theoretical frameworks to study the issue. We also present the possible methodological approaches that could be used but have not been yet applied to the issue.We secondly provide a meta-analysis and a meta-regression of the empirical literature, where the observed effect sizes and their heterogeneity were modelled and investigated using the empirical Bayes meta-analytical framework. Our investigation confirms the generally-found negative effect of subsidies on farm technical efficiency, suggesting that public subsidies distort farmers’ incentive to produce efficiently. The empirical Bayes estimate of the overalleffect size indicates that a 1% point increase in the subsidy share in farm income leads to a 1.65% decrease in the technical efficiency. Results from the meta-regression analysis reveal that the overall effect is robust to the method used, the production sector, and the area considered.
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