Agriculture and Income Distribution: Insights from a SAM of the Italian Economy

The paper presents the results of the first SAM analysis of the agricultural sector in Italy. A SAM of the Italian economy has been properly modified in order to focus the analysis on agriculture. Two type of analysis have been carried out: (i) a multiplier analysis, and (ii) an assessment of the distributive impacts of different agricultural policies. This paper proposes also a new method for disaggregating the institutional sectors and production factors in order to analyze income distribution within the economy, with special emphasis on the agricultural sector. Main results are: (i) "fully" decoupled income supporting schemes (transfers to agricultural households) are the most equitable interventions and determine a perfect targeting of the distributive effect on the relevant institutional sectors; (ii) "partially" decoupled income supporting interventions, as the ones implemented under the current CAP, are more effective than others in indirectly (i.e., through multiplier effects) generating positive impacts on the income of agricultural households; (iii) agricultural price support interventions show less desirable effects in terms of their distributive impacts: they are less effective as agricultural income-increasing policies and their distributive impacts are biased against poorer households both in agricultural and non-agricultural sectors.