The distributional impact of direct payments on Irish farm incomes

The objective of this paper is to analyse the distributional effects of the different income components of Irish farm income with a Gini comparison me thod and try disaggregating the overall Gini coefficient of income inequali ty by income source. Using individual farm data for 1992 and 1996, the im;b act on farm income distribution of the MacSharry CAP reform is assessed. In addition, the change in the Gini coefficient between these years is decomp osed into the changes in the within-source distribution of each income stre am and the share of each income stream. The favourable movement in the Gini coefficient is found to br due to the introduction of direct payments, whi ch target less well-off farmers. Market income remains the single largest i nfluence on deciding the income ranking of a farm while contributing less t o total income than before.