Evaluating the CAP Reform as a multiple treatment effect: evidence from Italian farms

This paper aims at evaluating the impact of the 2003 CAP reform on farm production choices. The 2003 Reform of the Pillar I and the Pillar II measures are considered as two distinct but interacting treatments eventually generating the expected outcome, that is, market (ri)orientation of farmers. The outcome of “market orientation” is measured by considering both the short-term production choices and the long-term investment decisions. The Average Treatment effect on the Treated (ATT) is estimated through alternative versions of the Propensity Score Matching (PSM) estimator. Results show that the 2003 Reform of Pillar I actually had a role in (ri)orienting short-term farm production decision and this effect is significantly reinforced, especially in investment decisions, when Pillar II measures are also taken into account. Pillar I reform seems to prevalently affect short-run production decisions while Pillar II support, when present, influences long-run choices (investments)