d'Artis Kancs

Static and Dynamic Distributional Effects of Decoupled Payments: Single Farm Payments in the European Union

This paper analyses the distributional effects of decoupled Single Farm Payments (SFP) in the European Union. In a static world the SFP benefit only farmers, irrespective of the implemented SFP model and irrespective of whether entitlements are tradable or not, except when the size of the allocated entitlements is larger than the eligible area and/or if entrants are eligible for the SFP. Then the SFP gets either partially or fully capitalized into land values and landowners benefit. In a dynamic world the effects depend on the nature of structural change, on the tradability of entitlements, and on the implementation model.

SPS Capitalization into Land Value: Generalized Propensity Score Evidence from the EU

This paper estimates the capitalization of the Single Payment Scheme (SPS) into land values. The theory suggests that the relationship between the SPS and land rents is non-linear and discontinuous, because the SPS impact on land values depends on many factors, such as policy implementation details, market imperfections and institutional regulations. In empirical analysis we employ a unique farm-level panel data set, and apply the generalized propensity score (GPS) matching approach to estimate the capitalization of the SPS. Our results suggest that around 6 percent of the total SPS get capitalized into land rents. On average in the EU, the non-farming landowners gains from the SPS are only 3 percent. However, there is a large variation in the capitalization rate for different SPS levels, and between Member States (between 0 and 58 percent).

Factor Content of Bilateral Trade: The Role of Firm Heterogeneity and Transaction Costs

The article studies the determinants of the factor content in foreign trade in countries from Central and Eastern Europe (CEE). The theoretical model relaxes several important assumptions such as factor price equalization, firm heterogeneity, and introduces technological differences into the standard Heckscher-Ohlin model. Based on the agricultural production and trade data for the CEE, we examine empirically three hypotheses, which relate cross-country differences in technology, relative factor abundance and transaction costs and market imperfections to the factor content of trade. We find that the first two hypotheses are confirmed by the majority of the developed EU countries, but rejected by roughly one half of the CEE transition country pairs. Second, we find that when accounting for the transaction costs of farm (re)organization, both hypotheses are confirmed by the majority of the CEE country pairs. These findings provide indirect evidence of market imperfections, and particularly, of transaction costs of farm (re)organization in the CEE. Copyright (c) 2010 International Association of Agricultural Economists.

R&D and Non-Linear Productivity Growth of Heterogeneous Firms

The present paper studies the relationship between RD (ii) the impact of RD (iii) the relationship between RD (iv) there are important inter-sectoral dierences with respect to R&D investment and firm productivity { high-tech sectors rms not only invest more in R&D, but also achieve more in terms of productivity gains connected with research activities.

Education in the East, Emigrating to the West?

This paper examines the potential impacts of East-West migration of talents on the innovative capital and hence the long-run growth prospects in Eastern sending countries. Complementing previous studies, we examine the impact of high skill migration not only on the formation of human capital, but also consider migrations impact on knowledge capital in the sending countries. In line with previous studies we find that in the short- to medium-term high skill migration strictly reduces national innovative capital and hence increases the gap between East and West. However, these effects might be mitigated by factors such as reinforced education of workers, productive investment of remittances, return migration and increased knowledge transfer. Given that the emigration of highly skilled affects human capital differently than knowledge capital, addressing the adverse impacts of the most talented and highly skilled worker emigration efficiently, differentiated policies are required for human capital and knowledge capital.

Investment Crowding-Out: Firm-Level Evidence from Germany

The main objective of the present paper is to estimate the extent to which firm investment is substituted (crowded-out) by investment support policies granted under the EU Rural Development Programme (RDP). In the empirical analyses we employ the difference-in-difference propensity score matching approach, which allows us to address several important sources of bias, such as selection bias, the simultaneity bias, and functional form misspecification, from which many previous studies suffer. Using panel data of 1,333 firms from the Schleswig-Holstein region in Germany, we find that the crowding-out effect of the RDP is close to 100%, implying that firms use public support to substitute for private investments. Furthermore, no evidence was found that, due to RDP programme support, firms would have brought forward their investments planned originally in a later period, rejecting the f inter-temporal substitution of investments.

European Integration and Labour Migration

The present paper studies how European integration might affect the migration of workers in the enlarged EU. Unlike the reduced-form migration models, we base our empirical analysis on the theory of economic geography a la Krugman (1991), which provides an alternative modelling of migration pull and push factors. Parameters of the theoretical model are estimated econometrically using historical migration data. Our empirical findings suggest that European integration would trigger selective migration between the countries in the enlarged EU. In the Baltics, Lithuania would gain about 7.25% of the total work force. In the Visegrad Four, the share of the mobile labour force would increase the most in Hungary, 8.35%, compared to the pre-integration state. Our predictions for the East-West migration are moderate and lower than those of reduced-form models: between 5.44% (from the Baltics) and 3.61% (from the Visegrad Four) would emigrate to the EU North. Because migrants not only follow market potential, but also shape the region’s market potential, the long-run agglomeration forces are sufficiently weak to make a swift emergence of a core-periphery pattern in the enlarged EU very unlikely.

Food Standards and Welfare: A General Equilibrium Model with Market Imperfections

We analyze the effects of high standards food chains on household welfare taking into account general equilibrium effects and market imperfections. To measure structural production changes and welfare effects on rural and urban households, our model has two types of agents, five kinds of products and four types of factors. We calibrate the model using dataset from China. The simulation results show that how poor rural households are affected depends on a variety of factors, including the nature of the shocks leading to the expansion of high standards sector, production technologies, trade effects, spillover effects on low standards markets, market imperfections, and labor market effects.