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Distributional Effects of the CAP on Western German Farm Incomes and Regional Farm Income Disparity

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  • Deppermann, Andre
  • Grethe, Harald
  • Offermann, Frank

Abstract

This study is concerned with measuring impacts of the Common Agricultural Policy (CAP) on farm income distribution of western Germany. Not only the sheer contribution of market price support and direct payments as a proportion of income is taken into account, but also the impact of support on production incentives. For this purpose, we apply a modelling system consisting of a partial equilibrium model and a programming model. Based on a comparison of Gini coefficients and a decomposition of overall inequality effects we conclude that liberalization of the agricultural sector leads to a more unequal distribution of family farm income in relative terms, whereas a liberalized market provides a more equal situation in absolute terms. Furthermore, we consider the impacts of liberalizing the agricultural market on regional differences in average agricultural income and conclude that in relative terms liberalization increases regional inequality.

Suggested Citation

  • Deppermann, Andre & Grethe, Harald & Offermann, Frank, 2011. "Distributional Effects of the CAP on Western German Farm Incomes and Regional Farm Income Disparity," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114442, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae11:114442
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    References listed on IDEAS

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    Keywords

    Income distribution; CAP; Farm Group Model; Equilibrium Model; Agricultural and Food Policy; Agricultural Finance;

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