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The Measurement Of Inequality In Canadian And U.S. Agricultural Income By Components Of Net Value Added

  • Erickson, Kenneth W.
  • Moss, Charles B.
  • Mishra, Ashok K.

This paper examines changes in net value added generated through Canadian and U.S. farm production, 1970-2000. We consider how the structural changes in Canadian and U.S. agriculture have affected the size and distribution of net value added and its components: rent, capital, labor, and to net farm income. We use the Theil Measure of Inequality (TMI) to compare and explain changes in 1) the between and within-region distribution of net value added, and 2) changes in the distribution of factor shares of net value added in Canada and in the U.S. Results show that in Canada (1960-2000), net value added has become somewhat more equally distributed relative to the number of farms per province, but has varied widely from 1972-1988. Between-region inequality in net value added accounted for from 0.5 to 85.5 percent of this inequality from 1960-2000. In the U.S. (1949-2000), net value added has become more unequally distributed. About half of the variation in net value added in the U.S. is due to between-region variation and about half to within-region variation in net value added. We find that most of the variation in the components of net value added (returns to capital, labor, nonoperator landlords, and to farm operators) in Canada and the United States is due to variations across regions, rather than to variations in the components of net value added themselves. These variations have generally been due to macroeconomic differences in regions, such as shifts in enterprise specialization, urbanization, changes in government programs, and to other structural changes in agriculture.

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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2002 Annual meeting, July 28-31, Long Beach, CA with number 19866.

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Date of creation: 2002
Date of revision:
Handle: RePEc:ags:aaea02:19866
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  1. Catherine J. Morrison Paul, 2000. "Modeling and Measuring Productivity in the Agri-Food Sector: Trends, Causes and Effects," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 48(3), pages 217-240, November.
  2. Gardner, Bruce L, 1992. "Changing Economic Perspectives on the Farm Problem," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 62-101, March.
  3. Ahearn, Mary Clare & Yee, Jet & Ball, V. Eldon & Nehring, Richard F., 1998. "Agricultural Productivity in the United States," Agricultural Information Bulletins 33687, United States Department of Agriculture, Economic Research Service.
  4. H. Bruce Huff, 1997. "The Changing Role of Public Policy in Canadian Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1401-1409.
  5. V. Eldon Ball & Jean-Christophe Bureau & Richard Nehring & Agapi Somwaru, 1997. "Agricultural Productivity Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1045-1063.
  6. Chavas, Jean-Paul, 2001. "Structural change in agricultural production: Economics, technology and policy," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 5, pages 263-285 Elsevier.
  7. V. Eldon Ball & Frank M. Gollop & Alison Kelly-Hawke & Gregory P. Swinand, 1999. "Patterns of State Productivity Growth in the U.S. Farm Sector: Linking State and Aggregate Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 164-179.
  8. Michael Boehlje, 1999. "Structural Changes in the Agricultural Industries: How Do We Measure, Analyze and Understand Them?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1028-1041.
  9. Purdy, Barry M. & Langemeier, Michael R. & Featherstone, Allen M., 1997. "Financial Performance, Risk, And Specialization," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(01), July.
  10. repec:jaa:jagape:v:29:y:1997:i:1:p:149-61 is not listed on IDEAS
  11. John E. Floyd, 1965. "The Effects of Farm Price Supports on the Returns to Land and Labor in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 73, pages 148.
  12. Henri Theil & Charles B. Moss, 1999. "Note The measurement of inequality by components of total expenditure," Empirical Economics, Springer, vol. 24(3), pages 559-561.
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