Distributional effects of direct payments in Switzerland

The switch from market-support to direct payments in Switzerland had impacts on the income distribution among farmers. In this paper, the distributional effect of the switch as a whole and of the different kinds of direct payments are elaborated through a presentation of different decomposed Gini coefficients. Although the income distribution in Swiss Agriculture is still more equal than in most other countries, the Gini coefficient has risen from 0.27 in 1990 to 0.38 in 2009 and is by now strongly dependent on the composition of direct payments. Off-farm income and direct payments decrease, while market income increases income inequality.