The distributional effects of agricultural policy reforms in Switzerland

This paper analyses the effects of Swiss agricultural policy reforms and the effects of farm income, off-farm income and direct payments on the distribution of the farm household income. To this end, the farm-level income records from the FADN data for the period 1990-2009 are used to calculate Gini coefficients and Gini elasticities. Bootstrap sampling procedures are applied to test for significant differences of the estimated parameters over time. The Gini coefficients estimated in our analysis show that the household income inequality in Swiss agriculture only slightly increased from 0.21 to 0.24, but the farm income inequality strongly increased from 0.27 to 0.38 in the considered period. We find furthermore that increasing off-farm incomes and direct payments would decrease the household income inequality. Especially direct payments that support farmers producing under adverse production conditions in the hill and mountain regions have found to be well targeted and thus contribute to the reductions in income inequality in agriculture.