Farm household income inequality in Slovenia

Štefan Bojnec, Imre Fertő


Aim of study: To investigate the structure and evolution of farm household income and examine the contribution of different sources of farm household income, particularly the impact of Common Agricultural Policy reform on farm household income inequality in Slovenia.

Area of study: Slovenia, one of the European Union member states.

Material and methods: A panel data set was compiled using Slovenian Farm Accountancy Data Network data at farm level for the period 2007-2013. Total farm household income was disaggregated into two different components: 1) income components, which can contain market income and off-farm income, and 2) subsidy components, which can contain subsidies from Pillars 1 and 2. Pillar 2 support included subsidies related to agri-environmental measures, less favoured areas and other rural development measures. The income distribution and decomposition were examined using the Gini decomposition method to determine the contribution of each income source and the policy shift from market to government support on farm household income and overall inequality.

Main results: A shift in Common Agricultural Policy and related measures determined the structure and evolution of farm household incomes. Off-farm income had a lesser and rather stable impact on farm household income inequality, while the major change involved an increase in the importance of subsidies from Pillar 2 which is consistent with a policy of targeting farms in less favoured areas. Subsidies from Pillar 1 reduced, while market income increased farm household income inequality.

Research highlights: Subsidies in farm incomes increased. They could reduce farm household income inequality.


farm income; off-farm income; Common Agricultural Policy; less favoured areas; Gini decomposition

Full Text:



Allanson P, 2006. The redistributive effects of agricultural policy on Scottish farm incomes. J Agr Econ 57 (1): 117-128.

Allanson P, Rocchi B, 2008. A comparative analysis of the redistributive effects of agricultural policy in Tuscany and Scotland. Rev Agr Environ Stud 86 (1): 35-56.

Allanson P, Kasprzyk K, Barnes AP, 2017. Income mobility and income inequality in Scottish agriculture. J Agr Econ 68 (2): 471-493.

Allison PD, 1978. Measure of inequality. Am Sociol Rev 43 (6): 865-880.

Baráth L, Fertő I, Bojnec Š, 2018. Are farms in less favoured areas less efficient? Agr Econ 49 (1): 3-12.

Bergmann D, O'Connor D, Thümmel A, 2015. Seasonal and cyclical behaviour of farm gate milk prices. Brit Food J 117 (12): 2899-2913.

Bojnec Š, Fertő I, 2013. Farm income sources, farm size and farm technical efficiency in Slovenia. Post-Commun Econ 25 (3): 343-356.

Bojnec Š, Fertő I, 2019. Do CAP subsidies stabilise farm income in Hungary and Slovenia? Agr Econ - Czech 65 (3): 103-111.

Bojnec Š, Latruffe L, 2013. Farm size, agricultural subsidies and farm performance in Slovenia. Land Use Policy 32: 207-217.

Bonfiglio A, Camaioni B, Coderoni S, Esposti R, Pagliacci F, Sotte F, 2016. Where does EU money eventually go? The distribution of CAP expenditure across the European space. Empirica 43 (4): 693-627.

Bourguignon F, 1979. Decomposable income inequality measures. Econometrica 47 (4): 901-920.

Chen C, Tsaur T, Rhai T, 1982. The Gini coefficient and negative income. Oxford Economic Papers 34 (3): 473-478.

Ciaian P, Kancs d'A, Paloma SG, 2015. Income distributional effects of CAP subsidies: micro evidence from the EU. Outlook Agr 44 (1): 19-28.

EC, 2017. The future of food and farming. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, COM(2017)713. European Commission, Brussels. (accessed on 10 May 2019).

El Benni N, Finger R, Mann S, Lehmann B, 2012. The distributional effects of agricultural policy reforms in Switzerland. Agr Econ - Czech 58 (11): 497-509.

El Benni N, Finger R, 2013. The effect of agricultural policy reforms on income inequality in Swiss agriculture-An analysis for valley, hill and mountain regions. J Policy Model 35 (4): 638-651.

European Union, 2019. How the EU budget is spent. (accessed on 10 May 2019).

Fertő I, Bakucs Z, Bojnec S, Latruffe L, 2017. Short communication: East-West European farm investment behaviour − The role of financial constraints and public support. Span J Agric Res 15 (1): e01SC01.

Gini C, 1921. Measurement of inequality of incomes. The Econ J 31 (121): 124-126.

Graveline N, Gremont M, 2017. Measuring and understanding the microeconomic resilience of businesses to lifeline service interruptions due to natural disasters. Int J Disaster Risk Red 24 (3): 526-538.

Hassouneh I, Serra T, Bojnec Š, 2015. Nonlinearities in the Slovenian apple price transmission. Brit Food J 117 (1): 461-478.

Keeney M, 2000. The distributional impact of direct payments on Irish farm incomes. J Agr Econ 51 (2): 252-265.

Knific K, Bojnec Š, 2015. Agricultural holdings in hilly-mountain areas in Slovenia before and after the accession to the European Union. Eastern European Countryside 21 (1): 19-34.

Lerman RI, Yitzhaki S, 1985. Income inequality effects by income source: a new approach and applications to the United States. Rev Econ Stat 67 (1): 151-156.

Loizou E, Karelakis C, Galanopoulos K, Mattas K, 2019. The role of agriculture as a development tool for a regional economy. Agr Syst 173 (C): 482-490.

Manero A, 2017. The limitations of negative incomes in the Gini coefficient decomposition by source. Appl Econ Lett 24 (14): 977-981.

Martinez P, Blanco M, Van Doorslaer B, Ramos F, Ceglar A, 2017. What role will climate change play in EU agricultural markets? An integrated assessment taking into account carbon fertilization effects. Span J Agr Res 15 (3): e0115.

Moreddu C, 2011. Distribution of support and income in agriculture. OECD Food, Agriculture and Fisheries Working Papers, No. 46. Paris.

Olper A, Raimondi V, Cavicchioli D, Vigani M, 2014. Do CAP payments reduce farm labour migration? A panel data analysis across EU regions. Eur Rev Agr Econ 41 (5): 843-873.

Severini S, Tantari A, 2013. The impact of agricultural policy on farm income concentration: The case of regional implementation of the CAP direct payments in Italy. Agr Econ 44 (3): 275-286.

Severini S, Tantari A, 2015. The distributional impact of agricultural policy tools on Italian farm household incomes. J Policy Model 37 (1): 124-135.

Shorrocks AF, 1980. The class of additively decomposable inequality measures. Econometrica 48 (3): 613-625.

Shorrocks AF, 1982. Inequality decomposition by factor components. Econometrica 50 (1): 193-211.

Shorrocks AF, 1984. Inequality decomposition by population subgroups. Econometrica 52 (6): 1369-1385.

Sinabell F, Schmid E, Hofreither MF, 2013. Exploring the distribution of direct payments of the Common Agricultural Policy. Empirica 40 (2): 325-341.

Unay-Gailhard İ, Bojnec Š, 2015. Farm size and participation in agri-environmental measures: Farm-level evidence from Slovenia. Land Use Policy 46: 273-282.

Unay-Gailhard İ, Bojnec Š, 2016. Sustainable participation behaviour in agri-environmental measures. J Clean Prod 138: 47-58.

Unay-Gailhard İ, Bojnec Š, 2019. The impact of green economy measures on rural employment: green jobs in farms. J Clean Prod 208: 541-551.

Unay-Gailhard İ, Bojnec Š, 2020. Public support effect on natural disaster management: A case study of ice storms in forests in Slovenia. Land Use Policy.

DOI: 10.5424/sjar/2019174-13996