The Role of Group-Time Heterogeneity in Assessing the Economic Impact of a European Agricultural Policy. Evidences from Geographical Indications Schemes

The European Union agricultural policy is moving toward an evidence-based policy making approach. In this context, impact evaluation grows in importance. However, is important that this kind of assessments provide unbiased results. Using the geographical indication policy, we try to shed some light on a concern that recently emerged in the technical literature about the estimation of the effect of a treatment when treatment effect heterogeneity is an issue. We estimated the effect of adopting the GI certification on farm’s economic results with a method widely used in literature and with a novel non-parametric estimator that accounts for heterogeneous effects. In a second phase, we performed an impact evaluation exercise using the novel estimator to understand the relevance of effect heterogeneity in the GI context. Results show that effect heterogeneity is likely a concern in this policy setting and that the use of the standard method may provide biased results.