Farm Structural Change in German Regions - An Empirical Analysis using Micro and Macro Data

General economic developments as well asrecent fundamental changes in the CommonAgricultural Policy will likely impact significantly on theEuropean farm structure. Although a decline of totalfarm numbers continues to be the general observation,important differences occur across regions and farmtypes. These differentiated developments and theirdeterminants are of high relevance for policy impactassessment at the regional level. The main objective ofthe analysis provided in this paper is to empiricallyidentify whether regionally specific characteristicsaccount for differences in regional farm structuredevelopment. This is exemplarily shown for GermanFADN regions. As methodological approach a combinedtime series, cross-sectional Markov chain analysis isapplied. The non-stationary Markov model is estimatedvia generalised cross-entropy estimation technique withthe transition probabilities being represented asmultinomial logit functions of explanatory variables andtheir coefficients. Prior information on the transitionprobabilities is obtained from observed single farmmovements of the FADN sample.