capitalization of government support in agricultural land prices what do we know abstract the objective of this paper is to provide an overview of existing literature both theoretically and empirically on the extent to which agricultural subsidies do translate into higher land values and rents and finally benefit landowners instead of agricultural producers our review shows that agricultural support policy instruments contribute to increasing the rental price of farmland and that the extent of this increase closely depends on the level of the supply price elasticity of farmland relative to those of other factors inputs on the one hand and on the range of the possibilities of factor input substitution in agricultural production on the other hand the empirical literature shows that land prices and rents have in general a significant positive and inelastic response to government support such inelastic response is thought to reflect the uncertain future of the farm programmes and in general studies have indicated that land prices are more responsive to government based returns than to market based returns

a comprehensive analysis of farmland value determination a county level analysis this study develops a comprehensive model of farmland value determination to analyze the effects of various economic variables such as net farm income government payments macroeconomic factors and demographic conditions on farmland values for the counties along the snake river valley in idaho land values net farm income and population show considerable variation among the counties therefore use of county level cross sectional and time series data helps to assess the impacts of various factors on land values more accurately the empirical results show that net farm income wheat yield population and credit availability have positive effects and property tax rates interest rates and debt to asset ratio have negative effects on farmland values

formally testing the present value model of farmland prices this paper applies recent statistical developments in the study of stock market price movements to study the plausibility of the constant expected returns version of the present value model as an explanation of farmland prices using iowa farmland price and rent data over the 1921 86 sample period formal test results indicate that although farmland price and rent movements are highly correlated price movements are not consistent with the implications of this model there appear to be persistent predictable excess positive and or negative returns in the iowa farmland market

sources of intra industry wage dispersion how much do employers matter observed human capital explains less than half of wage variation in bls industry wage surveys establishment based wage differentials controlling for occupation account for 20 70 percent of intra industry wage variation this corresponds to a standard deviation in wages of 14 percent of the mean almost as large as interindustry wage variation investigation suggests that establishment wage differentials are not random variations or returns to usual measures of human capital

the dissipation of minimum wage gains for workers through labor labor substitution evidence from the los angeles living wage ordinance author affiliation david fairris department of economics university of california riverside ca 92521 usa david fairris ucr edu corresponding authorleon fernandez bujanda oficina de investigaciones economicas banco central de venezuela av urdaneta esq carmelitas edf sede piso 2 caracas dc venezuela lefernan bcv org ve acknowledgment we have received helpful comments from philip babcock charlie brown david card eve caroli arin dube shelly lundberg mindy marks david neumark and participants in presentations at the society of labor economists uc berkeley ucla and pse in paris we acknowledge financial support from the ford foundation and the university of california labor and employment research fund and research support of various kinds from researchers at the los angeles alliance for a new economy 1 introductioneconomic theory suggests that firms will replace low skill workers with high skill workers if the two are substitutes in production and the wages of low skill workers increase as the result of a minimum wage labor labor substitution may also take place along dimensions other than skill if for example employers have a taste for discrimination and the minimum wage reduces the wage premium they must pay for favored personal characteristics of workers if affected firms replace low skill workers with high skill workers following enactment of a wage minimum the initial benefits of the regulation for workers at these firms will be dissipated over time as the wage gains for new hires are less than for members of the original workforce a similar dissipation of wage gains will occur if employers replace workers that are discriminated against in the labor market with those that are not most theoretical depictions of labor labor substitution focus on employer initiated causes it may result from changes in firms demand for worker skills from employer efforts to dissipate worker minimum wage rents by requiring greater work effort or less absenteeism from workers and by seeking workers that better match these new employer goals or from employers invoking their taste for discrimination however successful labor substitution rests on workers supply decisions as well indeed such substitution could result solely from labor supply effects if for example firms were to hire nonselectively from an altered more highly skilled or otherwise favored applicant pool which is brought on by the higher wage the empirical literature on the employment effects of wage minimums has found little employment loss among affected jobs or more highly impacted worker populations such as teenagers brown 1999 this suggests that there may be little labor labor substitution across broad skill occupational categories for example adults for teenagers workers with some college experience for high school graduates or backhoe operators for ditch diggers 1 however labor labor substitution may still take place along more refined dimensions of workers skills abowd and kilingsworth 1981 for example neumark and wascher 1996 find evidence that minimum wages lead firms to substitute away from younger teenagers and toward older more experienced teenagers labor substitution following a minimum wage may dissipate the initial wage gains for workers empirical evidence suggests however that just as in the case of unions card 1996 the rent dissipation is by no means complete it is now well established empirically that a spike exists in the wage distribution around the relevant minimum wage card and krueger 1995 dinardo fortin and lemieux 1996 suggesting that the wages of low skill workers are indeed affected by wage mandates 2 moreover job queues exist for minimum wage jobs suggesting that economic rents are earned by low wage workers in these positions holzer katz and krueger 1991

cash rents and land values in u s agriculture a firm level land valuation model is deduced which depends on the expected growth rate in net cash returns to land inflation expectations and property income and capital gains taxes it is then aggregated to obtain an aggregate two sector land valuation model that model is then estimated for twenty four individual states for the period 1960 81 in addition a pooled cross sectional regression model is estimated combining the twenty four state data the model results demonstrate that significant state differences exist in the land market and that in many states agricultural land values are influenced by nonagricultural demand for land

the effect of unions on the structure of wages a longitudinal analysis this paper studies the effects of unions on the structure of wages using an estimation technique that explicitly accounts for misclassification errors in reported union status and potential correlations between union status and unobserved productivity the econometric model is estimated separately for five skill groups using a large panel data set formed from the u s current population survey the results suggest that unions raise wages more for workers with lower levels of observed skills in addition the patterns of selection bias differ by skill group among workers with lower levels of observed skill unionized workers are positively selected whereas union workers are negatively selected from among those with higher levels of observed skill despite a large and sophisticated literature there is still substantial disagreement over the extent to which differences in the structure of wages between union and nonunion workers represent an effect of trade unions rather than a consequence of the nonrandom selection of unionized workers over the past decade several alternative approaches have been developed to control for unobserved heterogeneity between union and nonunion workers 2 one method that has been successfully applied in other areas of applied microeconometrics is the use of longitudinal data to measure the wage gains or losses of workers who change union status unfortunately longitudinal estimators are highly sensitive to measurement error even a small fraction of misclassified union status changes can lead to significant biases if the true rate of mobility between union and nonunion jobs is low this sensitivity led lewis 1986 to essentially dismiss the longitudinal evidence in his landmark survey of union wage effects in this paper i present some new evidence on the union wage effect based on a longitudinal estimator that explicitly accounts for misclassification errors in reported union status the estimator uses external information on union status misclassification rates along with the reduced form coefficients from a multi variate regression of wages on the observed sequence of union status indicators to isolate the causal effect of unions from any selection biases introduced by a correlation between union status and the permanent component of unobserved wage heterogeneity recognizing that unions may raise wages more or less for

power sector reform and co2 abatement costs in korea abstract the current korean administration is driving change in the power sector by gradually phasing out nuclear power plants expanding the use of renewable energy and imposing restrictions on the operation of coal power plants considering these changes the marginal abatement cost mac curve would provide crucial information to determine an appropriate greenhouse gas reduction target especially for 2030 this study derives the mac curves for the korean power sector in 2030 using a bottom up optimization model with three scenarios based on different carbon pricing schedules in addition the carbon price required to achieve the co2 emission targets in the korean power sector in 2030 are estimated the results show that a carbon price of 135 157 us tco2 would be required to achieve the 2030 emission target for the power sector by comparing the mac curves of three different scenarios we can reiterate the fact that early action regarding climate change mitigation is more effective and efficient than delayed action

pollution from the electric power sector in japan and efficient pollution reduction abstract under the scheme of the kyoto protocol there are plans for the efficient reduction of carbon dioxide emissions in the electric power sector nuclear power generation which emits no carbon dioxide in the process of generating electricity has come under scrutiny however this energy produces a new environmental issue the disposal of radioactive waste first we derive shadow prices of carbon dioxide and low level waste as marginal abatement costs in the case of the electric power sector in japan employing a directional output distance function it is found that the shadow prices are us 39 per tonne for carbon dioxide and us 1531 per liter for low level waste secondly we calculate the indirect morishima elasticity between carbon dioxide and low level waste in order to identify their substitutability and it is found that the substitution of low level waste for carbon dioxide is easier than the reverse this result suggests that with the amount of generated electricity fixed carbon dioxide can be substituted more easily by low level waste when the relative price of carbon dioxide increases for example as a result of implementation of a carbon dioxide tax or an emissions trading system

assessing the influence of direct payments on the rental value of agricultural land economic theory suggests that coupled and decoupled direct payments have different impacts on agricultural rental values because of the different production responses associated with these payments this study investigates the impact of both coupled and decoupled eu cap direct payments on rental values in northern ireland using panel data taken from the farm business survey for the period from 1994 to 2002 theoretically agricultural land rents are a function of expected market returns and expected associated direct payments the unobservable nature of expected returns means that actual market returns must be used as a proxy for the former in the empirical specification as a consequence the problem of bias due to expectation error arises using a gmm technique to take account of this problem the results of this study show that the impact of cap direct payments on rental values depends on the type of payment and on the nature of the production characteristics of the associated agricultural commodity

what are the key drivers of mac curves a partial equilibrium modelling approach for the uk marginal abatement cost mac curves are widely used for the assessment of costs related to co2 emissions reduction in environmental economics as well as domestic and international climate policy several meta analyses and model comparisons have previously been performed that aim to identify the causes for the wide range of mac curves most of these concentrate on general equilibrium models with a focus on aspects such as specific model type and technology learning while other important aspects remain almost unconsidered including the availability of abatement technologies and level of discount rates this paper addresses the influence of several key parameters on mac curves for the united kingdom and the year 2030 a technology rich energy system model uk markal is used to derive the mac curves the results of this study show that mac curves are robust even to extreme fossil fuel price changes while uncertainty around the choice of the discount rate the availability of key abatement technologies and the demand level were singled out as the most important influencing factors by using a different model type and studying a wider range of influencing factors this paper contributes to the debate on the sensitivity of mac curves

environmental policy uncertainty and marketable permit systems the dutch phosphate quota program tradable permits are generally considered as an efficient instrument to regulate pollution by individual producers however uncertainty about changes in or possible discontinuation of the program could make individual farmers reluctant to invest in tradable permits this article uses the option approach to derive a theoretical model that shows the impact of policy uncertainty on investment in tradable quota the empirical assessment provides weak evidence for the existence of option values due to policy uncertainty for phosphate quota in swine production in the netherlands

estimating the marginal abatement cost curve of co2 emissions in china provincial panel data analysis abstract this paper estimates the marginal abatement cost curve macc of co2 emissions in china based on a provincial panel for the period of 2001 2010 the provincial marginal abatement cost mac of co2 emissions is estimated using a parameterized directional output distance function four types of model specifications are applied to fit the mac carbon intensity pairs the optimal specification controlling for various covariates is identified econometrically a scenario simulation of china s 40 45 carbon intensity reduction based on our macc is illustrated our simulation results show that china would incur a 559 623 yuan t roughly 51 57 increase in marginal abatement cost to achieve a corresponding 40 45 reduction in carbon intensity compared to its 2005 level

the inconsistency of land values land rents and capitalization formulas this paper examines relationships that exist between farm income land values and capital asset pricing theory using two commonly referenced data sets it is shown that land prices and land rents do not have the same time series representations a necessary condition for the simple capital asset pricing theory to hold this suggests that a fundamental rethinking of the way in which land prices are viewed and modeled is needed more complex models that allow for rational bubbles risk aversion and future shifts in government policy or commodity prices may be required

who really benefits from agricultural subsidies evidence from field level data if agricultural subsidies are largely capitalized into farmland values then expanding support for agriculture may not benefit farmers who rent the land they farm suddenly reducing subsidies may be problematic to the extent that land values already embody expectations about future subsidies existing evidence on the incidence of subsidies on land values is mixed identification is obscured by unobserved or imprecisely measured factors that tend to be correlated with subsidies especially land quality and time varying factors like commodity prices and adverse weather events a problem that has received less attention is the fact that subsides and land quality on rented land may differ from owned land since most farms possess both rented and owned acreage farm level measures of subsidies land values and rental rates may bias estimated incidence using a new field level data set that for the first time precisely links subsidies to land parcels we show that this bias is considerable where farm level estimates suggest an incidence of 20 to 79 cents of the marginal subsidy dollar field level estimates from the same farms indicate that landlords capture just 10 25 cents the size of the farm and the duration of the rental arrangement have substantial effects incidence falls by 5 15 cents per acre when doubling total operated acres and the incidence falls by 0 1 1 2 cents with each additional year of the rental arrangement low incidence of subsides on rents combined with the farm size and duration effects suggest that farmers renting land have monopsony power

determinants of land value volatility in the u s corn belt understanding land value volatility and its reaction to exogenous shocks helps land owners investors and lenders assess risk land value volatility the variance of the unpredictable component of

boom bust cycles and ricardian rent north american agriculture has been characterized by many as a boom bust industry for example between 1973 and 1983 prairie farmers experienced the most prosperous period of grain farming ever known in western canada had the golden age finally arrived for prairie agriculture prosperity came to a grinding halt in the mid 1980s and in the late 1980s prairie grain farmers entered into one of the worst economic situ

the fischler reform of the common agricultural policy and agricultural land prices based on 7 300 agricultural land sales transactions we estimate the effect of the 2003 reform of the e u common agricultural policy on land prices as opposed to the main body of the literature on agricultural land values we do not start from a demand oriented net present value approach or hedonic pricing method but derive our reduced form pricing equation from a spatial land sales market model our empirical model accounts for spatial dependence and endogeneity of explanatory variables a reduction of payments by 50 ha would decrease land sales prices by 445 ha before and by 984 ha after the reform jel q15 q18

the capitalization of coupled and decoupled cap payments into land rental rates this article explores the extent to which payments under the common agricultural policy cap are capitalized into land rents in ireland with implications for the transfer efficiency of such payments since subsidies may not benefit targeted recipients if they are capitalized into input prices capitalization in the years preceding and following the decoupling of agricultural support payments from agricultural production is explored in the period prior to decoupling direct support pillar 1 payments were highly capitalized into irish agricultural rents 67 90 cents per euro of subsidies while in the post decoupling period capitalization appears to have declined somewhat

an analysis of growth of u s farmland prices 1963 82 increases in expected inflation or real growth in net rental income to land have been proposed as alternative explanations of the dramatic real growth in u s farmland prices in the 1970s in this paper the effect of inflation is shown to be theoretically ambiguous an empirical analysis using u s and international farmland prices suggests that most of the real land price growth can be explained by real growth in net rental income to land increases in expected inflation have had a negative effect on real land prices but the effect of inflation has been comparatively small

why do farmers fail farm bankruptcies 1910 78 econometric analysis of aggregate time series farm sector data suggests that prior to world war ii the farm bankruptcy rate appears to be associated with financial risk variables while postwar data show a strong association with business risk variables there does not appear to be any evidence that agricultural support payments since world war ii have induced deferred or reduced farm failures

valuation of marginal co2 abatement options for electric power plants in korea the electricity generation sector in korea is under pressure to mitigate greenhouse gases as directed by the kyoto protocol the principal compliance options for power companies under the cap and trade include the application of direct co2 emission abatement and the procurement of emission allowances the objective of this paper is to provide an analytical framework for assessing the cost effectiveness of these options we attempt to derive the marginal abatement cost for co2 using the output distance function and analyze the relative advantages of emission allowance procurement option as compared to direct abatement option real option approach is adopted to incorporate emission allowance price uncertainty empirical result shows the marginal abatement cost with an average of 14 04 ton co2 for fossil fueled power plants and confirms the existence of substantial cost heterogeneity among plants which is sufficient to achieve trading gains in allowance market the comparison of two options enables us to identify the optimal position of the compliance for each plant sensitivity analyses are also presented with regard to several key parameters including the initial allowance prices and interest rate the result of this paper may help korean power plants to prepare for upcoming regulations targeted toward the reduction of domestic greenhouse gases

the impacts of the tax deferred exchange provision on farm real estate values this study examines the effects of the section 1031 tax deferred exchange provision on agricultural land values the provision allows taxpayers to defer taxation for relinquished productive assets if a like kind asset is acquired within the allotted time of 180 days the analysis examines a set of 3 580 farm real estate transaction from 55 agricultural counties in indiana over the period 2003 2006 hedonic price analysis suggests that properties acquired under a like kind exchange are associated with a 1 32 price premium jel h23 q15

quantifying co2 abatement costs in the power sector co2 cap and trade mechanisms and co2 emission taxes are becoming increasingly widespread to assess the impact of a co2 price marginal abatement cost curves maccs are a commonly used tool by policy makers providing a direct graphical link between a co2 price and the expected abatement however such maccs can suffer from issues related to robustness and granularity this paper focuses on the relation between a co2 emission cost and co2 emission reductions in the power sector the authors present a new methodology that improves the understanding of the relation between a co2 cost and co2 abatement the methodology is based on the insight that co2 emissions in the power sector are driven by the composition of the conventional power portfolio the residual load and the generation costs of the conventional units the methodology addresses both the robustness issue and the granularity issue related to maccs the methodology is based on a bottom up approach starting from engineering knowledge of the power sector it offers policy makers a new tool to assess co2 abatement options the methodology is applied to the central western european power system and illustrates possible interaction effects between e g fuel switching and renewables deployment

the impacts of different farm programs on cash rents county level annual observations for iowa from 1996 through 2000 were used to measure the impacts of farm program payments on cash rental rates the econometric analysis explicitly incorporates spatial autocorrelation cash rental rates were found to increase by almost one dollar per acre for each additional dollar per acre paid for market loss assistance and production flexibility contracts whereas conservation reserve program payments appear to exert no effect on cash rental rates a counterintuitive finding that warrants further examination is the small but negative impact of deficiency payments on cash rental rates

job queues and wages this paper uses job applications data to investigate the relationship between job queues and wage differentials the main finding is that openings for jobs that pay the minimum wage attract more job applicants than jobs that pay either slightly more or slightly less than the minimum wage this spike in the job application rate distribution suggests that ex ante rents generated for employees by an above market level minimum wage are not completely dissipated by reductions in nonwage benefits in addition we find that highly unionized firms large firms and firms in high wage industries tend to receive relatively many job applicants for openings

farmland accumulation and prices a model of farmland accumulation is developed to study factors influencing u s farmland values this model stresses the manner in which credit is allocated for land purchases to secure necessary loans for additional land to expand farm size the farmer provides as collateral his net accumulated wealth thus land acquisitions are made to increase profits and to provide leverage for further land expansion besides income and consumption the level of accumulated debt is one of the main determinants of farmland prices derived demand for farmland is developed and the pricing equation for farmland is estimated as part of a structural equation model

linking the price of agricultural land to use values and amenities the recent appreciation in agricultural land values across the united states has raised a number of important questions for farmers farmland owners lenders and policy makers while traditional economic theory suggests that farmland values are determined by the discounted stream of expected returns previous research has shown that agricultural land values are actually driven by a complex set of factors this study leverages the unique characteristics of a national land based usda survey on farmland values and cash rents to estimate broad national level determinants of the market value of cropland and pastureland our results support past research findings that indicate farmland values are only partially explained by agricultural returns we find that multiple nonagricultural attributes of farmland also contribute to the market value

farm debt default and foreclosure an economic rationale for policy action economic analysis of farm programs typically focusses on economic costs here we show that because of market failures and imperfections there are possible economic benefits to be derived from programs which reduce or eliminate the threat of default and foreclosure a production model of an indebted firm is developed and serves as a basis for an aggregate model which identifies possible costs and benefits from a program of transfers to indebted farmers the challenge facing policy makers is to design programs which capture the benefits of reducing the probability of default while minimizing perverse incentive effects of such programs

co2 abatement from renewables in the german electricity sector does a co2 price help abstract the overlapping impact of the emission trading system ets and renewable energy re deployment targets creates a classic case of interaction effects whereas the price interaction is widely recognized and has been thoroughly discussed the effect of an overlapping instrument on the abatement attributable to an instrument has gained little attention this paper estimates the actual reduction in demand for european union allowances that has occurred due to re deployment focusing on the german electricity sector for the five years 2006 through 2010 based on a unit commitment model we estimate that co 2 emissions from the german electricity sector are reduced by 35 to 60 mtons or 10 to 18 of what estimated emissions would have been without any re policy but with the co 2 price remaining in place at the observed level furthermore we find that the abatement attributable to re injections is greater in the presence of an allowance price than otherwise the same holds for the ets effect in presence of re injection this interaction effect is consistently positive for the german electricity system at least for the considered years and on the order of 0 5 to 1 5 of emissions

combining bottom up and top down abstract we motivate the formulation of market equilibrium as a mixed complementarity problem which explicitly represents weak inequalities and complementarity between decision variables and equilibrium conditions the complementarity format permits an energy economy model to combine technological detail of a bottom up energy system with a second best characterization of the over all economy our primary objective is pedagogic we first lay out the complementarity features of economic equilibrium and demonstrate how we can integrate bottom up activity analysis into a top down representation of the broader economy we then provide a stylized numerical example of an integrated model within both static and dynamic settings finally we present illustrative applications to three themes figuring prominently on the energy policy agenda of many industrialized countries nuclear phase out green quotas and environmental tax reforms

vegetable spirits and energy policy this study investigates the extent to which the 2005 energy policy act specifically the ethanol mandate contributed to the rise in farmland values we use the location of new ethanol plants to identify the capitalization effect of the mandate by these spatially advantaged operations we use a difference in difference propensity score matching estimator to control for the non random selection of ethanol production facilities the empirical strategy uses farmland parcel values from the 2001 7 june agriculture survey we find that new ethanol facilities had no effect on nearby farmland values prior to the mandate but had statistically significant effects after the policy copyright 2013 oxford university press

does structure matter the impact of switching the agricultural policy regime on farm structures abstract this paper investigates the relationship between structural change in agriculture and a policy regime switch at the regional level using the agent based spatial and dynamic simulation model agripolis we simulate structural change for two different farm structures in response to a policy change results show that structural adjustment differs depending on the initial structure

understanding farmland price changes this paper develops a structural model of land prices which includes the multidimensional effects of inflation on capital erosion savings return erosion and real debt reduction as well as the effect of changes in the opportunity cost of capital the results show that inflation and changes in the real returns on capital are major explanatory factors in farmland price swings in addition to returns to farming additionally the effects of credit market constraints and expectations schemes are considered explicitly in the analytical model

implications of intertemporal optimization for house and land prices the euler equation is used for the intertemporal allocation of durable goods in conjunction with a simple model of housing flow supply to derive implications for the relation between house and land prices data from england and wales fails a key time series test in this respect the rejection of the theory is shown to be mainly due to the specification of the housebuilding industry perfect competition makes house prices cointegrated with land prices and housebuilding costs there is also evidence that borrowing constraints impair the validity of the representative agent framework for the housing sector

minimum wage effects on employment substitution and the teenage labor supply evidence from personnel data using personnel data from a large us retail firm i examine the firm s response to the 1996 federal minimum wage increase compulsory increases in average wages had negative but statistically insignificant effects on overall employment however increases in the relative wages of teenagers led to significant increases in the relative employment of teenagers especially younger and more affluent teenagers further analysis suggests a pattern consistent with noncompetitive models where the legislation affected mainly the wages of teenagers and so was only moderately binding it led both to higher teenage labor market participation and to higher absolute employment of teenagers

land prices and farm based returns the theoretical and empirical relationship between farm based residual returns the opportunity cost of farmland and farmland prices is developed temporal hypotheses concerning the source of land price movements are tested using a variant of granger causality in the aggregate farmland prices are found to be unidirectionally caused by residual farm based returns the findings support the hypothesis that farmland prices are determined mainly within the farm sector and lend credence to the use of extrapolative expectations processes in structural farmland price models

effects of sustained financial stress on the financial structure and performance of the farm sector financial stress in agriculture as indicated by the problems identified in jolly et al s paper can be caused by many factors farm failures can be the result of everything from poor individual management decisions to weather conditions in other countries differences in the causes of failures have different implications for the analysis of the effects of continuing stress if for example all of the farmers who are failing today are simply poor managers then the effects of continued stress are likely to be minimal in fact the elimination of poor managers might bring about net social benefits by reducing the cost of food if good managers are being forced out of agriculture because of public policies however the effects may be substantially different thus while the central purpose of this paper is to describe the measurable effects of sustained financial stress on the farm sector identifying the causes of today s difficulties is an integral part of the research recent literature hughes and penson perry et al knutson richardson and jolly grant et al suggests three principal reasons for farmers difficulties macroeconomic policies farm policies and individual management decisions the economic environment facing farmers has certainly played a central role in the current cash flow difficulties and or resulting business failures characterizing american agriculture macroeconomic policies of recent years have generated prices and interest rates that have skewed economic returns in the economy away from capital intensive and export sensitive industries such as farming farm policies have also helped to shape current conditions although farm programs under the 1977 and 1981 farm bills were sufficient to mask the early stages of the current decline in farm profitability the resources needed to continue to offset other factors have not been nor are they likely to be forthcoming finally some farmers and farm lenders have contributed to their own problems many of the producers currently confronted with financial difficulties overcommitted themselves during the 1970s assuming continuation of favorable economic conditions as noted by king and sonka because longterm debt and variable interest rates are often used to gain control of assets managers need to consider the viability of a specific decision for several policy and macroeconomic scenarios in addition to the current policy the rest of this paper is presented in three parts first discussion is focused on the aggregate effects of pursuing different macroeconomic policies through the end of this decade the next section deals with the impacts of continued stress on different types of farms given different beginning leverage positions and farm policies finally some of the effects of continued farm financial distress beyond the farm gate are discussed

the evolution of farm programs and their contribution to agricultural land values the economic environment of agricultural producers has been influenced by formal u s agricultural policy for more than seventy years among the first pieces of new deal legislation proposed by incoming president franklin d roosevelt was a farm program designed to address declines in crop prices and net farm income key features of the agriculture act of 1933 included mandatory price support for specified commodities direct subsidy payments to farmers and supply controls farm programs once viewed as temporary and supplementary to agricultural earnings are increasingly viewed as permanent and of major proportion gardner examined the relationships between u s farm commodity programs and u s farm structure while others see sumner for concept evidence and implications have examined farm programs and specific crops gardner 2002 and weersink et al analyzed the effects of farm program programs upon land values these studies examined various aspects of agricultural policy including whether farm program payments have enhanced land prices and landowner wealth rather than the welfare of producers while it would seem logical that revenueenhancing farm programs would increase land values reliably estimating the magnitudes of farm program effects upon land values is an empirically challenging task both statistical and budgeting based methodologies have been used to estimate the share of land prices generated by farm program payments statistically based studies are complicated by the fact that both real per acre crop receipts

does unmeasured ability explain inter industry wage differentials this paper provides empirical assessments of the two leading explanations of measured inter industry wage differentials 1 true wage differentials exist across industries and 2 the measured differentials simply reflect unmeasured differences in workers productive abilities first we summarize the existing evidence on the unmeasured ability explanation second we construct a simple model which shows that if matching is important then endogenous job change decisions can create important self selection biases even in first differenced estimates of industry wage differentials third we analyze a sample that approximates the experiment of exogenous job loss we find that i the wage change experienced by a typical industry switcher closely resembles the difference in the relevant industry differentials estimated in a cross section and ii pre displacement industry affiliation plays an important role in post displacement wage determination

the changing roles of urban influence and agricultural productivity in farmland price determination between 2000 and 2010 inflation adjusted u s farmland values increased by over 80 this period of rapid price appreciation coincided with both the agricultural commodity price boom and the broader financial crisis this paper examines the degree to which the determinants of farmland prices changed over this period using a panel of farmland transfer declarations from 98 illinois counties hedonic price analysis demonstrates that the relative importance of urban influence decreased over this period while the relative importance of agricultural productivity increased the study carries important implications for farmers farmland owners and policy makers

do legal minimum wages create rents a re examination of the evidence the effects of minimum wage laws have interested economists for many years while much of the research regarding minimum wage laws has focused on its employment effects several economists have been concerned with the laws effects on the non pecuniary aspects of jobs there is disagreement in the literature as to whether minimum wage legislation creates rents in those jobs for which the law is a constraint several researchers have argued that firms will offset any rent created by the minimum wage by reducing the non wage aspects of the job 4 7 14 15 in a recent paper holzer katz and krueger 5 present evidence suggesting that employers do not completely offset the minimum wage they use information on application rates for job openings found in the employment opportunities pilot project data set eopp to test for the existence of rents on minimum wage jobs minimum wage jobs are found to have longer queues of applicants than other jobs ceteris paribus which suggests the existence of rents this paper presents additional tests of the existence of rents using the eopp data we find that workers who received starting wages equal to the minimum wage have a significantly higher probability of quitting than workers paid either less than or more than the minimum wage this result seems to contradict the findings of holzer katz and krueger regarding minimum wage jobs as we see it our findings support wessels 15 contention that since wages are more visible than non pecuniary aspects of compensation low wage workers mistakenly queue for minimum wage jobs thinking them more attractive than they are but then quit when reality sets in the paper is organized as follows section ii discusses the existing theoretical and empirical research regarding minimum wages section iii presents our empirical procedures section iv discusses the eopp data set and in section v we discuss our results finally in section vi we draw some tentative conclusions and discuss future research

amenity benefits and the optimal allocation of land agricultural land often yields sig nificant amenity benefits that may not be re flected in the prevailing allocation of land be tween agricultural and nonagricultural uses this paper introduces a simple supply demand model that incorporates these benefits in the de termination of optimal land allocation three stage least squares and county level data are used to estimate the supply and demand param eters these estimates confirm the plausibility of the conceptual model results from the con tingent valuation literature illustrate the extent of underallocation of land to agriculture due to existing institutional conditions some correc tive measures and their distributional effects are discussed and quantified jel q24

insolvency in agriculture bad managers or the common agricultural policy bad management is often blamed for the failure of firms yet an empirical investigation of the annual rate of insolvency in agriculture and horticulture in england and wales revealed a relationship with the price of land the rate of insolvency was negatively related to the current price of land but the lag structure estimated suggests that the rate of insolvency could be positively related to the land price two years previously this result is in accordance with a theoretical model which shows that the optimal gearing strategy under rising land prices induces farmers to increase their indebtedness since common agricultural policy price support has become capitalized into land prices this suggests that some of the insolvency in agriculture and horticulture was the result of previous agricultural policy the results do however underline farm management advice that farmers should beware of relying on capital gains to remain in business

the impact of decoupled payments on u s cropland values an extensive literature has shown that various farm programs may influence the value of farmland but other studies have not examined the cropland price effects of direct or decoupled payments separate from countercyclical payments this study uses nationally representative confidential field level panel data with farmer reported per acre land values we analyze the impact of decoupled and other farm program payments on farmland values using a fixed effects model and controlling for various factors that influence farmland values we find that an additional dollar of decoupled payments has a large and statistically significant impact on farmland values of about 18 per acre these results are comparable with similar studies undertaken in europe

the applicability of marginal abatement cost approach a comprehensive review abstract the marginal abatement cost mac methodology is widely used in climate change policies policy makers rely on mac to assess feasible strategies and related costs to achieve emission reduction goals this paper introduces a variety of mac methodologies aiming at solving diverse problems which utilizes various calculable logic thus producing different results and implications this study applies a mind mapping method to capture differentiation of mac methods and systematically classify mac methodologies the applicability path analysis was proposed based on principles such as stakeholder type decision making objectives cost concept strategy mode and information scope our goal is to assess the applicability of different methodologies to reduce misuse by policy makers and to serve as a guide for subsequent research which might prompt and lead to the derivation of more consequential results in future studies the results of this study suggest that the complex method is not always better than the simplified method because policy makers are required to select the appropriate method according to the type of information needed it may even be suggested that mac could be reliable by ranking relative value of options compared with baseline rather than focusing on the absolute value of individual measures

understanding real interest rates this paper outlines an approach to measuring real interest rates and testing hypotheses on their behavior it then describes what we know about real interest rates in the aggregate economy and provides estimates of real interest rates for the agricultural sector the evidence presented in this paper indicates that real interest rates for the agricultural economy have been extremely high in the l98ds and that their behavior seems to be linked to that found for real rates in the aggregate economy what has been the source of these high real rates the answer seems to be that it was a result of a concerted effort by the monetary authorities to disinflate the economy however the brunt of the fed s disinflationary policy has fallen more heavily on the farm sector which has had to face far higher reel rates than the rest of the economy although breaking the back of inflation was certainly a worthy goal for the fed farmers have had to pay a heavy price they have had to suffer for the sins of an economy that was excessively inflationary which then had to be brought back into line with disinflationary policy this abstract was borrowed from another version of this item

the impact of farmland price changes on farm size and financial structure a modified vickers model is used to show that farmland capital gains provide incentive to increase farm acreage and debt use farmland capital losses have the opposite effect the model indicates that part of the current financial vulnerability of the u s farm sector can be traced to management decisions made in response to the farmland capital gains of the 1970s the effects are not purely tax driven though taxes can affect the magnitude of incentives the vickers model is modified to allow a finite horizon taxes and the recognition of unrealized capital gain or loss

capitalization of the single payment scheme 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 a nonlinear and discontinuous relationship between the sps and land rents in empirical analysis we employ unique farm level panel data and apply the generalized propensity score matching approach our estimates suggest a 6 to 10 sps capitalization rate on average in the european union the nonfarming landowners gains from the sps are only 4 however there is a large variation in the capitalization rate for different sps levels and between different member states 3 to 94

revisiting the minimum wage employment debate throwing out the baby with the bathwater we revisit the minimum wage employment debate which is as old as the department of labor in particular we assess new studies claiming that the standard panel data approach used in much of the new minimum wage research is flawed because it fails to account for spatial heterogeneity these new studies use research designs intended to control for this heterogeneity and conclude that minimum wages in the united states have not reduced employment we explore the ability of these research designs to isolate reliable identifying information and test the untested assumptions in this new research about the construction of better control groups our evidence points to serious problems with these research designs we conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage

the effect of agricultural policy on farmland values the extent to which agricultural support programs have been capitalized into farmland prices has been examined in this study a present value land price model was developed which decomposes returns to the land base into its two possible sources farm production and government subsidies and allows the discount rates associated with these two income sources to vary the empirical results indicate that government payments are discounted less than marketbased returns in ontario thus government payments have been viewed as a more stable source of income to ontario farm operators during the last half century than market based returns

impacts of trade liberalizations under the uruguay round on the world sugar market the impacts of the uruguay round policy provisions on the world sugar market show that these policies will stabilize the world sugar price at slightly higher levels than in the baseline global sugar consumption will increase as a result of the income growth caused by the uruguay round economic resources will be allocated more efficiently among the sugar industries of the various countries however the impacts on the sugar industries in countries with strong producer supports will be rather small because the negotiation process of the uruguay round has accommodated the changes in sugar policies already implemented by individual countries in the past few years low cost sugar producing countries will benefit from the higher world sugar price and consumers in countries with protected markets will benefit from lower domestic prices

the impact of decoupled payments on farm choices conceptual and methodological challenges abstract in this paper we review the methodological framework for analysing decoupled payments in models of agricultural production market and technological uncertainty farm efficiency credit constraints farm household choices involving extra agricultural decisions policy uncertainty and long run impact of decoupling on investment and land values are the relevant issues that should be pursued by methodological and empirical analysis future research should refine the analysis of decoupled payments mainly trying to provide results that can be useful for policy simulation to bridge the gap between analysis at the individual level and sector policy models

the impact of the minimum wage on other wages in this paper i explore how changes in the minimum wage affect various occupational wages i postulate that other wages increase for two reasons first firms try to mitigate the deterioration in a worker s relative wage which would cause him to reduce his work effort and second there is an increase in the demand for nonminimum wage workers wage adjustment patterns are examined to ascertain whether wage comparisons play a role in the adjustment process the empirical work shows a short run wage compression among white collar occupations which is consistent with the wage comparison model however large standard errors make inferences weak

the effect of minimum wages on low wage jobs we estimate the eect of minimum wages on low wage jobs using 138 prominent state level minimum wage changes between 1979 and 2016 in the u s using a dierence in dierences approach we first estimate the eect of the minimum wage increase on employment changes by wage bins throughout the hourly wage distribution we then focus on the bottom part of the wage distribution and compare the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it to infer the employment eect we find that the overall number of low wage jobs remained essentially unchanged over the five years following the increase at the same time the direct eect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution our estimates by detailed demographic groups show that the lack of job loss is not explained by labor labor substitution at the bottom of the wage distribution we also find no evidence of disemployment when we consider higher levels of minimum wages however we do find some evidence of reduced employment in tradable sectors we also show how decomposing the overall employment eect by wage bins allows a transparent way of assessing the plausibility of estimates

econometric modeling of the capitalization formula for farmland prices an econometric model is formulated to explain the dynamic behavior in farmland prices a second order rational distributed lag on net crop share rents received by landlords captures the dynamic movements of prices and performs well in conditional post sample forecasts the adjustment path of land prices in response to a perturbation in rents is a protracted dampened cycle the implicitly estimated tax free capitalization rate on rent associated with equilibrium land price is 4 0 neither the expected rate of inflation nor an exponential trend on rent expectations has a significant effect on land prices