Using the EU-SILC to model the impact of the economic crisis on inequality

peer-reviewedIn this paper we attempted to chart the impact of the early part of Ireland’s economic crisis from 2008–2009 on the distribution of income. In order to decompose the impact of changes in different income components, we utilised a microsimulation methodology and the EU-SILC User Database. This simulation based methodology involved the disaggregation of the 6 main benefit variables in the EU-SILC into 17 variables for our tax-benefit model. Validating, our results were positive, giving us confidence in our methodology. We utilised the framework to model changes in the level of income inequality from the period just before the crisis in 2004 to the depth of the worst year of the crisis in 2009. In terms of the impact of the economic crisis, we found that income inequality fell in the early part of the crisis modelled in this paper. Much of this change was due to rising inequality of market incomes, (even when discounting unemployment). This was due to the differential effect of the downturn on different sectors where some sectors such as the construction and public sectors were significantly hit, while the international traded sectors have been relatively immune from the downturn and have seen continued growth. The impact of the tax-benefit system has been to mitigate this upward pressure, with a gradual rise in the redistributive effect of the tax-benefit system driven by an increase in demand on the benefits side and increased progressivity on the tax side. Jel codes H22, H55, C1

The Welfare Impact of Price Changes on Household Welfare and Inequality 1999-2011

peer-reviewedThis paper attempts to use applied micro-economic research to understand the impact of price changes over the period 1999-2011 in Ireland. This measure combines an efficiency component using a Linear Expenditure System (LES) and an equity component using the Atkinson Index of Inequality. The efficiency component includes the behavioural response to price changes for non-subsistence expenditures thereby producing a Cost of Living Index. The Atkinson Index of Inequality produces an inequality measure and this is combined with the Cost of Living Index to produce an overall welfare measure. This extends upon the existing Irish literature on this issue by accounting for this broader set of components. The results show that changes in the cost of living have differed substantially between households both in terms of demographics and the position of the household in the income distribution and that behavioural response can potentially improve the welfare position of households in response to price changes in most years

Microsimulation of indirect taxes

The goal of this paper is to simulate a tax shift from labour to consumption and perform a distributional analysis of the reform. Microsimulation programs are often uniquely focussed on the personal income tax system and on social security contributions and benefits. However, against a political background where income taxes are under increased pressure and alternative, less distortive forms of taxation come under consideration, microsimulation models enriched with expenditure data and consumption tax structures could play an important role in sharpening the (distributional) picture of such systemic changes. The current paper discusses an algorithm for this enrichment - mainly with VAT, excises and other consumption taxes - within the context of the EUROMOD-framework and applies the obtained program to the simulation of a decrease of social security contributions compensated by a rise in standard VAT rate to maintain government budget neutrality for four EU countries. The measure is found to have a (first order) regressive effect, pointing to the fact that keeping redistribution constant would require the remaining post-reform income taxation to become more progressive.

The Role of Pluriactivity in Farm Exit and Labour Supply Decisions. Factor Markets Working Document No. 67, August 2013

EDITED VERSION TO BE PUBLISHED SOON Pluriactivity has been a topic of research in agriculture for the best part of a century. It is a term which has both broad and narrow definitions and hence is subject to multiple interpretations. This paper considers two forms of pluriactivity: within the farm gate pluriactivity, also commonly referred to as farm diversification, and beyond the farm-gate pluriactivity, also known as multiple job holding. Previous studies of pluriactivity have shown that it can inhibit the natural process of structural change in the farm sector, by allowing small and unprofitable farms to survive with the support of income from outside the sector. In this paper, two empirical models of pluriactivity are estimated using farm level data for Ireland. The first examines the impact of on-farm diversification on off-farm labour supply, while the second investigates the relationship between off-farm labour supply and farm exit which is specified in the context of retirement and non-succession. The result of the first model suggests that farms that engage in within the farm gate pluriactivity are less likely to engage in beyond the farm gate pluriactivity, in other words more diversified farmers are less likely to work off farm. The second model confirms previous findings in the literature that part-time farmers have a reduced probability of having a farm successor. While the model results are specific to the Irish case, they do provide some value insights into the impacts of pluriactivity on structural change in farming

Agricultural Labour Market Flexibility in the EU and Candidate Countries. Factor Markets Working Document No. 49, June 2013

Factor markets that function well are a crucial condition for the competitiveness and growth of agriculture. Institutions and regulation may give rise to agricultural labour market heterogeneity, which could have important effects on the functioning of the labour market and other agricultural factor markets in EU member states. This paper first defines the institutional framework for the labour market, and then presents a brief literature review of previous studies of labour market institutional frameworks. Based on the literature, a survey to characterise agricultural labour markets was undertaken, which was implemented for a selection of EU27 and EU candidate countries, with responses based on expert opinion. The survey data were then used to construct indices of labour market flexibility/rigidity for the countries examined. These indices were used to make inter-country labour market comparisons and to draw inferences about the institutions and functioning of the agricultural labour market

A Microsimulation Model for the Land Rental Market in Irish Farming

peer-reviewedIn this paper, we utilize Teagasc National Farm survey data to analyse the agricultural land rental market in Ireland with a newly developed agent-based microsimulation (ABM) model and a classical walrasian equilibrium model of the land rental market. We conclude that the microsimulation model has a number of strengths in addressing the interactions between landowners and tenants and dealing with the impact of economic changes on the farm size concentration. The equilibrium model retains some value in dealing with the question of price determination and in illustrating the potential surpluses to be gained from a more active land rental market. The paper contains a comparison of simulation results from the ABM model with recent farm-level data and Census of Agriculture data. These comparisons indicate the relevance of some findings from the simulation model including the rise in average dairy farm size and the decline in area allocated to non-dairy cattle farming. However, the sheep farming system appears to have defied the predictions from the simulation model and this may be attributed to the recent improvement in economic performance for this sector. The ABM model can be further refined to account for decisions in relation to the choice of farming system, the question of retirement and farm exit

Land Market Review and Outlook 2017

teagasc publicationThis report brings together the respective expertise of both organisations (Teagasc and SCSI) to increase the range and quality of the data that is available on the agricultural land market in Ireland

The local economic impact of climate change mitigation in agriculture

Greenhouse gas (GHG) mitigation measures are currently being implemented in the agricultural sector across the globe. Questions have been raised about the distributional and spatial impacts of agricultural emissions mitigation policies, especially at the local level. This study examines the local impact of a low-income farming sector, beef farming, in a typical Irish beef farming county, County Clare. Input-output analysis reveals that Clare beef farmers purchase the vast majority of farm inputs within the county, with intra-county suppliers providing 90% of their inputs and overheads. We examine the impact of reducing the size of the beef herd in Co. Clare as a direct consequence of meeting national GHG emissions targets by 2030. Taking direct, indirect, and induced effects together, there is an €18.4 million reduction in economic activity in 2030 following the decrease in the beef herd with €14.72 million of that reduction taking place within the Mid-West region

Determinants of Farm Labour Use: A Comparison between Ireland and Italy. Factor Markets Working Documents No. 60, August 2013

This paper examines the effect of the decoupling of farm direct payments upon the off-farm labour supply decisions of farmers in both Ireland and Italy, using panel data from the Farm Business Survey (REA) and FADN database covering the period from 2002 to 2009 to model these decisions. Drawing from the conceptual agricultural household model, the authors hypothesise that the decoupling of direct payments led to an increase in off-farm labour activity despite some competing factors. This hypothesis rests largely upon the argument that the effects of changes in relative wages have dominated other factors. At a micro level, the decoupling-induced decline in the farm wage relative to the non-farm wage ought to have provoked a greater incentive for off-farm labour supply. The main known competing argument is that decoupling introduced a new source of non-labour income i.e. a wealth effect. This may in turn have suppressed or eliminated the likelihood of increased off-farm labour supply for some farmers. For the purposes of comparative analysis, the Italian model utilises the data from the REA database instead of the FADN as the latter has a less than satisfactory coverage of labour issues. Both models are developed at a national level. The paper draws from the literature on female labour supply and uses a sample selection corrected ordinary least squares model to examine both the decisions of off-farm work participation and the decisions regarding the amount of time spent working off-farm. The preliminary results indicate that decoupling has not had a significant impact on off-farm labour supply in the case of Ireland but there appears to be a significantly negative relationship in the Italian case. It still remains the case in both countries that the wealth of the farmer is negatively correlated with the likelihood of off-farm employment

A survey of farm management practices relating to the risk factors, prevalence, and causes of lamb mortality in Ireland

SIMPLE SUMMARY: A reduction in lamb mortality would benefit farmers both economically and ethically. The major causes of lamb mortality are similar worldwide. Targeting the specific causes can result in reduced lamb mortality. This involves identifying underlying factors associated with lamb mortality and subsequently recommending changes to management practices. The objective of this study was to investigate the risk factors associated with lamb mortality on Irish sheep farms to provide a greater understanding of the necessary management practices required to reduce lamb mortality. This was achieved by identifying relationships between on-farm practices and risk factors of lamb mortality associated with these practices. Predators, lamb birth weight, and diseases were perceived by farmers to be the main causes of lamb mortality. Individual lambing pens were used on most sheep farms but were not cleaned and/or disinfected on 26% of them. Lamb mortality tended to be lower on farms that used best-known practices. Full-time farmers that used hospital and individual pens had a higher gross margin (€18/ewe). Management systems affect both lamb mortality and flock gross margin. Every 1% decrease in average lamb mortality across Irish flocks is worth ~€3 million annually to the Irish sheep sector. ABSTRACT: Lamb mortality is a key factor influencing ewe productivity and profitability. The current study investigated risk factors associated with and management practices implemented on sheep farms to reduce lamb mortality. A survey consisting of 13 multiple-part questions (57 separate questions) was administered to all sheep farmers participating in the Teagasc National Farm Survey, representative of the Irish national population of sheep farms. A total of 60% of respondents identify mating or lambing date, and this practice tended to be associated with reduced lamb mortality (1.2%, p = 0.08). Individual lambing pens were used by 88% of farmers, but 26% did not clean or disinfect them. A total of 79% and 9.5% of farmers applied iodine to all lambs’ navels and administered antibiotics to all lambs to treat and/or prevent diseases, respectively. Most farmers vaccinated their ewes (86%) and lambs (79%) against clostridial diseases and/or pasteurellosis; 13% vaccinated against abortion agents. Lamb mortality tended to be lower (Kruskal–Wallis (KW) = 2.749; p = 0.09) on farms that used stomach tubing, heat box, iodine, hospital, and individual pens compared with farms that do not implement all those practices. Predators, lamb birth weight, and diseases were perceived by respondents to be the three main causes of live-born lamb mortality. The gross margin is significantly higher on lowland farms by €37 per ewe compared with hill farms (Kruskal–Wallis (KW) = 4.056; p < 0.001). The combination of full-time farming and the use of hospital and individual pens improved gross margin (€18/ewe, p = 0.028). It is concluded that on-farm management practices affect both lamb mortality and flock gross margin