Structural Change and Farm Investment Support in Austria

The effects of policy supported farm investments on structural change in agriculture have been studied rarely. The heterogeneity of farms and the problem of self-selection are challenging the evaluation of treatments in agriculture. Econometric methods can help to overcome these problems. In this paper, we apply a conditional Difference-in-Difference (DiD) estimation, where we combine Direct Covariate Matching with a DiD estimation. Our dataset consist of more than 90,000 farms. In order to measure the development and the heterogeneity of the effects after the investment we look at several years and different farm groups separately. Our results show that investing farms significantly enlarge and intensify their production more than non-investing farms. Furthermore, the results indicate that investments are often not completely implemented short-term but require a certain implementation period. This applies in particular to cattle farming.