Assessing structural change in French agriculture with a parametric Markov chain model
Résumé
The Markov chain model (MCM) has become a popular tool in the agricultural economics literature
to explain the past evolution of and simulate the future developments in the number and size
distribution of farms. In this paper, I show that the way MCMs have been implemented by
agricultural economists so far suffers from the fact that transition probabilities are estimated as
almost independent variables (up to adding-up to unity constraints). The alternative parametric
MCM I propose addresses the deriving issues since (i) it is parsimonious in terms of parameters; (ii)
it can be estimated with simple econometric techniques; (iii) it reveals detailed information on the
structural change processes at hand. To demonstrate its effectiveness, the model is applied to the
French strand of the farm accounting data network (FADN) for the period 2000-2012.