IDEAS home Printed from https://ideas.repec.org/p/ags/iapr03/15750.html
   My bibliography  Save this paper

Allocation Effects of Policy Reform: A Micro-Simulation of Macro-Model Results for the United States

Author

Listed:
  • Hopkins, Jeffrey W.
  • Hanson, Kenneth
  • Somwaru, Agapi
  • Burfisher, Mary E.

Abstract

By changing marginal prices and therefore production incentives, removal of government payments will result in a re-allocation of factors of production as farm households pursue alternative economic opportunities. At the economy-wide level these impacts are small, but closer inspection reveals that some household-level impacts will be larger and other households will be affected little if at all. The underlying heterogeneity of the agricultural sector results in variable adjustment along two dimensions. First, survey data show that payments are not evenly distributed so their removal does not have a uniform impact across the sector. Second, even if payments were evenly distributed, factor endowments are not, so that ability to enter into alternative enterprises and employment opportunities varies as well. Using micro-data from a national survey of farm households, we simulate the effects predicted by a disaggregated CGE due to removal of government payments. By bringing to the forefront the distributional character of farm and nonfarm labor income, other factor income, and tax payments, our micro-simulation approach can be a valuable tool for understanding the relationship between policy incidence and response, an issue sure to arise in implementing policy reform.

Suggested Citation

  • Hopkins, Jeffrey W. & Hanson, Kenneth & Somwaru, Agapi & Burfisher, Mary E., 2003. "Allocation Effects of Policy Reform: A Micro-Simulation of Macro-Model Results for the United States," Policy Reform and Adjustment Workshop, October 23-25, 2003, Imperial College London, Wye Campus 15750, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
  • Handle: RePEc:ags:iapr03:15750
    as

    Download full text from publisher

    File URL: http://purl.umn.edu/15750
    Download Restriction: no

    References listed on IDEAS

    as
    1. Hanson, Kenneth & Somwaru, Agapi, 2003. "Distributional Effects Of U.S. Farm Commodity Programs: Accounting For Farm And Non-Farm Households," 2003 Annual meeting, July 27-30, Montreal, Canada 21944, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Beard, Nick & Swinbank, Alan, 2001. "Decoupled payments to facilitate CAP reform," Food Policy, Elsevier, vol. 26(2), pages 121-145, April.
    3. Mishra, Ashok K. & El-Osta, Hisham S. & Morehart, Mitchell J. & Johnson, James D. & Hopkins, Jeffrey W., 2002. "Income, Wealth, And The Economic Well-Being Of Farm Households," Agricultural Economics Reports 33967, United States Department of Agriculture, Economic Research Service.
    4. Orden, David & Paarlberg, Robert & Roe, Terry, 1999. "Policy Reform in American Agriculture," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226632643.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew Feltenstein & Luciana Lopes & Janet Porras Mendoza & Sally Wallace, 2013. "“The Impact of Micro-simulation and CGE modeling on Tax Reform and Tax Advice in Developing Countries”: A Survey of Alternative Approaches and an Application to Pakistan," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1309, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iapr03:15750. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://agadjust.aers.psu.edu/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.