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

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  • Jerzy Michalek
  • Pavel Ciaian
  • d’Artis Kancs

Abstract

This paper estimates the capitalization of the single payment scheme (SPS) into land values. The theory suggests a nonlinear and discontinuous relationship between the SPS and land rents. In empirical analysis we employ unique farm-level panel data and apply the generalized propensity score matching approach. Our estimates suggest a 6% to 10% SPS capitalization rate. On average in the European Union, the nonfarming landowners’ gains from the SPS are only 4%. However, there is a large variation in the capitalization rate for different SPS levels and between different member states (3% to 94%).

Suggested Citation

  • Jerzy Michalek & Pavel Ciaian & d’Artis Kancs, 2014. "Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the European Union," Land Economics, University of Wisconsin Press, vol. 90(2), pages 260-289.
  • Handle: RePEc:uwp:landec:v:90:y:2014:ii:1:p:260-289
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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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