Do Government Payments Influence Farm Size and Survival?

Using farm-level data from the 1987, 1992, and 1997 Census of Agriculture, this study estimates what effect agricultural payments have had on the likelihood of farm business survival and on farm size. The unique panel data set permits conditioning current farm size on past farm size, which removes much of the individual heterogeneity of farms that could be spuriously correlated with payment levels. Results indicate that between consecutive censuses, past per acre payments have a significant positive effect on farm business survival and a small yet significant influence on the size of continuing farms.