@article{Saint-Cyr:208912,
      recid = {208912},
      author = {Saint-Cyr, Legrand D.F. and Piet, Laurent},
      title = {Movers and stayers in the farming sector: accounting for  unobserved heterogeneity in structural change},
      address = {2015},
      number = {913-2016-72271},
      series = {15-06},
      pages = {31},
      year = {2015},
      abstract = {This article compares the respective performance of the  mover-stayer model (MSM) and the
Markov chain model (MCM)  to investigate whether accounting for unobserved  heterogeneity in
the rate of movements of farms across size  categories improves the representation of the  transition
process. The MCM has become a popular tool in  agricultural economics research to describe how
farms  experience structural change and to study the impact of the  various drivers of this process,
including public support.  Even though some studies have accounted for heterogeneity  across
farms by letting transition probabilities depend on  covariates depicting characteristics of farms
and/or  farmers, only observed heterogeneity has been considered so  far. Assuming that structural
change may also relate to  unobserved characteristics of farms and/or farmers, we  present an
implementation of the MSM which considers a  mixture of two types of farms: the `stayers' who
always  remain in their initial size category and the `movers' who  follow a first-order Markovian
process. This modeling  framework relaxes the assumption of homogeneity in the  transition
process which the basis of the usual MCM. Then,  we explain how to estimate the model using
likelihood  maximization and the expectation-maximization (EM)  algorithm. An empirical
application to a panel of French  farms over 2000-2013 shows that the MSM outperforms the
MCM  in recovering the underlying year-on-year transition  process as well as in deriving the longrun
transition  matrix and predicting the future distribution of farm  sizes.},
      url = {http://ageconsearch.umn.edu/record/208912},
      doi = {https://doi.org/10.22004/ag.econ.208912},
}