Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the European Union

Jerzy Michalek; Pavel Ciaian; d’Artis Kancs

doi:10.3368/le.90.2.260

Article Figures & Data

Figures

Tables

Download figure
Open in new tab
Download powerpoint
Figure 1
The Effect of the Single Payment Scheme with Deficit Entitlements
Download figure
Open in new tab
Download powerpoint
Figure 2
The Effect of the Single Payment Scheme with Surplus Entitlements and Credit Market Imperfections
Download figure
Open in new tab
Download powerpoint
Figure 3
The Effect of the Single Payment Scheme and Coupled Area Payments
Download figure
Open in new tab
Download powerpoint
Figure 4
Average Capitalization Rate of the Single Payment Scheme for Different Support Levels

Tables

Figures

View popup

Table 1

Capitalization Rate of the Single Payment Scheme into Land Rents

	Average Dose Response (Δw)			Average Capitalization [Δw(T) - Δw(7O)]/(T)			Marginal Capitalization [Δw(Γ+ Γ) - Δw(T)]/[(Γ+1) - T\
Support Level (Γ = SPSftia) (1)	Full Sample (2)	Hybrid (3)	Decoupling (4)	Full Sample (5)	Hybrid (6)	Decoupling (7)	Full Sample (8)	Hybrid (9)	Decoupling (10)
O	− 23	− 39	− 38
36	11	− 37	− 36	0.94	0.03	0.04	0.94	0.03	0.04
72	− 5	− 30	− 29	0.25	0.12	0.11	− 0.43	0.20	0.19
108	− 10	− 13	− 16	0.12	0.24	0.20	− 0.14	0.49	0.36
144	− 6	− 6	− 15	0.12	0.23	0.16	0.12	0.20	0.05
180	− 1	— 9	− 20	0.12	0.16	0.10	0.12	− 0.10	− 0.14
216	0	− 10	− 18	0.11	0.13	0.09	0.05	− 0.02	0.04
252	0	— 7	− 12	0.09	0.13	0.10	− 0.02	0.08	0.19
288	— 2	− 5	− 6	0.07	0.12	0.11	− 0.05	0.05	0.15
324	− 5	− 5	− 5	0.06	0.10	0.10	− 0.06	− 0.01	0.04
360	— 7	— 7	− 6	0.05	0.09	0.09	− 0.06	− 0.04	− 0.05
396	− 8	— 7	− 8	0.04	0.08	0.07	− 0.04	− 0.01	− 0.06
432	— 9	− 6	— 9	0.03	0.08	0.07	− 0.03	0.03	− 0.03
468	− 10	− 4	— 9	0.03	0.07	0.06	− 0.01	0.07	0.02
504	— 9	− 1	— 7	0.03	0.08	0.06	0.00	0.08	0.06
522	− 9	1	− 5	0.03	0.08	0.06	0.01	0.08	0.08
Aggregate weighted average				0.06	0.10	0.09

View popup

Table 2

Farm Size, Land Renting, and Nonfarming Land Owner Gains from the Single Payment Scheme (SPS), 2007

	SPS/ha (€/ha)				Land Renting				Capitalization Rate				Nonfarnnng Landowners’ Gain
		Farm Size (ha)				Farm Size (ha)				Farm Size (ha)				Farm Size (ha)
	All Farms (9)	0-10 (10)	10-50 (11)	>50 (12)	All Farms (13)	0-10 (6)	10-50 (7)	>50 (8)	All Farms (9)	0-10 (10)	10-50 (11)	>50 (12)	All Farms (13)	0-10 (14)	10-50 (15)	>50 (16)
Belgium	288	69	332	317	0.65	0.27	0.70	0.77	0.05	0.07	0.05	0.06	0.04	0.04	0.04	0.04
Denmark	350	161	358	359	0.18	0.11	0.11	0.25	0.05	0.06	0.05	0.05	0.01	0.01	0.01	0.02
Germany	311	67	331	338	0.55	0.34	0.45	0.67	0.05	0.07	0.05	0.05	0.04	0.03	0.02	0.04
Greece	822	886	492	285	0.24	0.18	0.57	0.79	0.04	0.03	0.04	0.07	0.02	0.01	0.02	0.05
Spain	138	144	140	Ill	0.17	0.10	0.19	0.40	0.14	0.08	0.11	0.17	0.05	0.01	0.02	0.07
France	183	9	171	221	0.75	0.50	0.64	0.85	0.08	0.12	0.09	0.08	0.07	0.06	0.06	0.07
Ireland	293	327	281	311	0.13	0.02	0.11	0.20	0.06	0.05	0.06	0.06	0.01	0.00	0.01	0.01
Italy	251	243	266	260	0.25	0.18	0.35	0.46	0.07	0.06	0.07	0.07	0.03	0.01	0.02	0.03
Luxemburg	238	0	251	272	0.42	0.12	0.34	0.49	0.07	0.25	0.08	0.07	0.04	0.04	0.03	0.04
Netherlands	293	136	336	375	0.33	0.11	0.40	0.40	0.05	0.05	0.05	0.05	0.02	0.01	0.02	0.02
Austria	243	189	256	229	0.26	0.16	0.25	0.39	0.08	0.07	0.07	0.09	0.02	0.01	0.02	0.03
Portugal	142	169	107	72	0.17	0.11	0.25	0.32	0.18	0.07	0.14	0.26	0.06	0.01	0.03	0.10
Finland	212	24	224	221	0.29	0.00	0.26	0.37	0.09	0.12	0.09	0.09	0.03	0.00	0.02	0.04
Sweden	223	108	230	223	0.40	0.15	0.26	0.48	0.09	0.08	0.09	0.09	0.05	0.02	0.03	0.05
United Kingdom	274	64	311	277	0.33	0.14	0.23	0.36	0.08	0.12	0.06	0.08	0.04	0.03	0.01	0.04
EU-15	318	400	247	239	0.31	0.17	0.34	0.58	0.07	0.04	0.07	0.08	0.04	0.01	0.03	0.05

Note: The capitalization rates are constructed using estimates from Table 1 column (5). The values for Iand renting, SPSZha, capitalization rate, and nonfarming landowners gain areweighted averages over all farms in the 2007 FADN sample. For Iand renting, utilized agricultural area (UAA) is used as the weight; for the rest of the variables, the value of SPS is used as the weight. The weights account also for the number of farms each farm represents in the total population.

View popup

Table A1

Estimates of the Support Equation for Full Sample

	Coef.	Std. Err.
Maximum likelihood equation
UAA per FL 2004	− 0.0002005^*	0.000103
Economic size per FL 2004	0.0002868^**	0.000101
Output per FL 2004	− 1.50e-08	9.48e-08
Gross farm income per FL 2004	3.78e-09	1.60e-07
Liabilities per FL 2004	1.32e-07^***	2.54e-08
Total subsidies to gross farm income 2004	0.0026854	0.002732
Investment subsidies to net investment 2004	− 0.000793	0.002400
Coupled subsidies to gross investment 2004	3.94e-07	0.002358
Rented land to UAA 2004	− 0.244827^***	0.030837
Entitlements per FL 2007	− 3.28e-06^***	1.14e-06
Constant	5.53674^***	0.022214
Estimated standard deviation
Constant	1.197378^***	0.0066058
Observations	16,428

Note: FL, family labor; UAA, utilized agricultural area.
* p < 0.1;
↵** p < 0.05;
↵*** p < 0.01.

View popup
Table A2
Summary Statistics of the Distribution of the Generalized Propensity Score for Full Sample
Observations Mean Std. Dev. Min. Max.
gps_1 16,428 2.8e-04 0.0016 0.0000 0.2068
gps_2 16,428 0.3254 0.0075 0.0003 0.3332
gps_3 16,428 0.1458 0.0137 0.0000 0.3327
gps_4 16,428 0.0664 0.0093 0.0000 0.3017

View popup

Table A3

Difference Test of Conditional Means for Full Sample

	Support Interval No. 1: [0. 35]			Support Interval No. 2: [35. 900]			Support Interval No. 3: [900, 1.200]			Support Interval No. 4: [1.200. 10,000]
	Mean Difference	Std. Dev.	t-Value	Mean Difference	Std. Dev.	t-Value	Mean Difference	Std. Dev.	t-Value	Mean Difference	Std. Dev.	t-Value
UAA per FL 2004	19.75	30.13	0.66	− 25.60	22.53	− 1.14	43.98	54.21	0.81	45.08	47.69	0.95
Economic size per FL 2004	13.89	22.55	0.62	− 6.62	16.82	− 0.39	− 8.37	40.46	− 0.21	− 11.42	35.26	− 0.32
Output per FL 2004	12,139	24,558	0.49	− 4,327	18,367	− 0.24	− 41.983	44,973	− 0.93	3,794	38,716	0.10
Gross farm income per FL 2004	8,274	15,885	0.52	− 33.07	11.881	0.00	− 18,220	28,809	− 0.63	− 14,565	25,083	− 0.58
Liabilities per FL 2004	43,395	77,041	0.56	− 47,426	56,895	− 0.83	16,926	140,000	0.13	65,338	120,000	0.55
Total subsidies to gross farm income 2004	0.12	0.09	1.27	− 0.10	0.08	− 1.19	0.10	0.24	0.42	0.04	0.20	0.19
Investment subsidies to net investment 2004	− 0.11	0.12	− 0.95	0.09	0.10	0.92	− 0.02	0.25	− 0.09	− 0.06	0.22	− 0.30
Coupled subsidies to gross investment 2004	22.19	81.51	0.27	− 21.62	62.68	− 0.34	12.55	155.92	0.08	13.39	134.96	0.10
Rented Iand to LTAA 2004	0.00	0.00	− 0.33	0.01	0.00	1.71	0.01	0.01	0.64	− 0.01	0.01	− 1.24
Entitlements per FL 2007	464.26	3,021.00	0.15	− 646.36	2,251.70	− 0.29	1.513.20	5,397.30	0.28	1.429.80	4,752.30	0.30

Note: FL, family labor; UAA, utilized agricultural area.

View popup

Table A4

GPS Matching Regression (Dependent Variable: Land Rent Difference 2007-2004) for Full Sample

	Coef.	Std. Err.	t	P>\t\
T	− 0.006	0.005	− 1.390	0.166
R	761.395	199.622	3.810	0.000
R^2	− 5,090.853	1,343.682	− 3.790	0.000
R^3	9,040.258	2,417.125	3.740	0.000
T*R	0.031	0.049	0.630	0.532
Constant	− 23.105	6.917	− 3.340	0.001
Observations	16,428

Note: Estimated equation: Rent difference 2007-2004 = SPS+GPS+GPS^2+GPS^3+SPS*GPS.

View popup

Table A5

Estimates of the Support Equation for Hybrid and Decoupling Subsamples

	Hybrid		Decoupling
	Coef.	Std. Err.	Coef.	Std. Err.
Maximum Likelihood Equation
UAA per FL 2004	− 0.0005458***	0.00007	− 0.0004173***	0.00011
Economic size per FL 2004	0.000291***	0.00006	0.0003253***	0.00006
Output per FL 2004	− 0.00000091***	0.00000	− 0.00000105***	0.00000
Gross farm income per FL 2004	0.00000196***	0.00000	0.00000212***	0.00000
Liabilities per FL 2004	0.0000000965***	0.00000	0.00000011***	0.00000
Total subsidies to gross farm income 2004	0.0004014	0.00173	0.003486	0.00281
Investment subsidies to net investment 2004	0.0009836	0.00185	0.000803	0.00194
Coupled subsidies to gross investment 2004	− 6.33E-07	0.00000	− 6.39E-06	0.00004
Rented land to UAA 2004	0.0285001	0.02452	− 0.0527594**	0.02879
Entitlements per FL 2007	− 0.00000193***	0.00000	− 0.00000356***	0.00000
Constant	5.645974***	0.01620	5.733992***	0.01946
Estimated Standard Deviation
Cons	0.5426951***	0.00495	0.5699589***	0.00569

Note: FL, family labor; UAA, utilized agricultural area.

View popup

Table A6

Summary Statistics of the Distribution of the Generalized Propensity Score for Hybrid and Decoupling Subsamples

	Obs.	Mean	Std. Dev.	Min.	Max.
Hybrid
gps_1	5,999	0.0000	0.0000	0.0000	0.0028
gps_2	5,999	0.7289	0.0367	0.0000	0.7351
gps_3	5,999	0.0630	0.0208	0.0000	0.6742
gps_4	5,999	0.0013	0.0112	0.0000	0.7329
Decoupling
gps_1	5,018	0.0000	0.0001	0.0000	0.0044
gps_2	5,018	0.6933	0.0385	0.0000	0.6999
gps_3	5,018	0.0887	0.0251	0.0000	0.6504
gps_4	5,018	0.0038	0.0120	0.0000	0.6772

View popup

Table A7

Difference Test of Conditional Means for Hybrid and Decoupling Subsamples

	Support Hterval No. 1: [0, 35]			Support Hterval No. 2: [35, 900]			Support Hterval No. 3: [900, 1,200]			Support Hterval No. 4: [1,200, 10,000]
	Mean Difference	Std. Dev.	t-Value	Mean Difference	Std. Dev	t-Value	Mean Difference	Std. Dev.	t-Value	Mean Difference	Std. Dev.	t-Value
Hybrid
UAA per FL 2004	15.83	223.16	0.07	41.03	134.87	0.30	46.92	213.65	0.22	77.57	170.05	0.46
Economic size per FL 2004	9.60	163.80	0.06	24.26	98.74	0.25	− 32.59	151.68	− 0.21	− 17.10	120.37	− 0.14
Output per FL 2004	7,573.80	170,000.00	0.04	34,971.00	100,000.00	0.34	− 35,558.00	170,000.00	− 0.21	27,134.00	130,000.00	0.20
Gross farm income per FL 2004	16,001.00	110,000.00	0.14	603.71	67,755.00	0.01	− 7,922.00	110,000.00	− 0.07	30,511.00	84,440.00	0.36
Liabilities per FL 2004	73,286.00	570,000.00	0.13	− 58,314.00	340,000.00	− 0.17	43,199.00	490,000.00	0.09	82,962.00	390,000.00	0.21
Total subsidies to gross farm income 2004	0.24	0.35	0.70	− 0.18	0.36	− 0.49	− 0.08	1.44	− 0.06	0.24	1.24	0.20
Hvestment subsidies to net investment 2004	− 0.04	0.56	− 0.07	0.04	0.34	0.12	− 0.01	0.24	− 0.04	− 0.01	0.42	− 0.01
Coupled subsidies to gross investment 2004	35.30	224.43	0.16	− 32.06	296.10	− 0.11	33.55	1,196.50	0.03	35.87	1,026.50	0.03
Rented Iand to UAA 2004	− 0.01	0.05	− 0.29	0.03	0.03	1.04	− 0.01	0.09	− 0.11	0.00	0.08	0.00
Entitlements per FL 2007	− 1,888.10	22,424.00	− 0.08	7,179.70	13,502.00	0.53	3,079.70	20,840.00	0.15	633.24	16,501.00	0.04
Decoupling
UAA per FL 2004	− 3.1781	237.75	− 0.01337	44.413	181.78	0.24432	53.926	238.3	0.2263	83.853	249.93	0.3355
Economic size per FL 2004	13.505	174.54	0.07738	22.388	132.72	0.16869	− 19.116	171.16	− 0.11168	− 12.194	180.98	− 0.06738
Output per FL 2004	7,270.1	180,000	0.03966	38,916	140,000	0.2783	− 13118	190,000	− 0.07039	31,246	200,000	0.1602
Gross farm income per FL 2004	17,750	120,000	0.14869	2,196.5	91,059	0.02412	1,798.8	120,000	0.01515	27,357	120,000	0.21891
Liabilities per FL 2004	79,885	610,000	0.13157	− 61,334	460,000	− 0.13265	47,899	570,000	0.08448	71,109	610,000	0.11682
Total subsidies to gross farm income 2004	0.22136	0.2799	0.79085	− 0.10434	0.26656	− 0.39143	− 0.14035	0.9082	− 0.15454	− 0.49028	0.8089	− 0.60611
Hvestment subsidies to net investment 2004	− 0.04258	0.59675	− 0.07135	0.03627	0.37258	0.09734	− 0.01255	0.23157	− 0.05418	0.0022	0.55294	0.00399
Coupled subsidies to gross investment 2004	− 8.865	31.959	− 0.27738	12.089	21.852	0.55322	− 8.6353	26.514	− 0.32569	− 16.409	32.902	− 0.4987
Rented Iand to UAA 2004	− 0.00794	0.04477	− 0.17736	0.03733	0.03064	1.2183	− 0.03786	0.08222	− 0.46052	− 0.06118	0.07479	− 0.81806
Entitlements per FL 2007	− 3,128.1	23,898	− 0.13089	6,943.4	18,256	0.38033	3,911.9	23,650	0.16541	1,661.2	24,908	0.06669

Note: FL, family labor; UAA, utilized agricultural area.

View popup

Table A8

GPS Matching Regression (Dependent Variable: Land Rent Difference 2007-2004) for Hybrid and Decoupling Subsamples

	Coef.	Std. Err.	t	P> \|t\|
Hybrid
T	0.030	0.011	2.730	0.006
R	241.262	155.049	1.560	0.120
R^2	− 603.651	414.701	− 1.460	0.146
R^3	450.098	323.787	1.390	0.165
T*R	− 0.021	0.050	− 0.430	0.665
Constant	− 38.615	17.133	− 2.250	0.024
Decoupling
T	0.032	0.012	2.750	0.006
R	216.439	187.077	1.160	0.247
R^2	− 714.653	534.105	− 1.340	0.181
R^3	635.644	440.257	1.440	0.149
T*R	0.019	0.058	0.340	0.736
Constant	− 37.604	18.590	− 2.020	0.043