Movers and Stayers in the Farming Sector: Another Look at Heterogeneity in Structural Change
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The Markov chain model (MCM) has become a popular tool in the agricultural economics
literature to study the impact of various drivers on the structural change of farms, including
public support. In order to relax the process-homogeneity assumption underlying the
MCM, we consider a mixture of two types of agents, the ‘stayers’ who always remain in
their initial size category, and the ‘movers’ who follow a first-order Markovian process. An
empirical application to a panel of commercial French farms over 2000-2012 shows that
the mover-stayer model (MSM) is a better modeling framework to recover the underlying
transition probability matrix.