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Giancarlo Lutero, Paola Pianura and Edoardo Pizzoli

Rural Areas Definition for Monitoring Income Policies: The Mediterranean Case Study. WYE CITY GROUP On statistical on rural development and agriculture household income. Giancarlo Lutero, Paola Pianura and Edoardo Pizzoli. Rome, 11-12 june 2009 – FAO Head-Quarters. Outlines. WYE CITY GROUP.

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Giancarlo Lutero, Paola Pianura and Edoardo Pizzoli

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  1. Rural Areas Definition for Monitoring Income Policies: The Mediterranean Case Study WYE CITY GROUP On statistical on rural development and agriculture household income Giancarlo Lutero, Paola Pianura and Edoardo Pizzoli Rome, 11-12 june 2009 – FAO Head-Quarters

  2. Outlines WYE CITY GROUP • The Mediterranean region: political subdivisions and data available • Rural-Urban classifications • The Panel model • Results • Concluding remarks and future developments Rome, 11-12 june 2009 – FAO Head-Quarters

  3. The Mediterranean Region WYE CITY GROUP Rome, 11-12 june 2009 – FAO Head-Quarters

  4. The Mediterranean Region WYE CITY GROUP • Political subdivisions: • 24 countries; 8 members of European Union (EU), 2 city-states (Gibraltar, Monaco) and 3 countries with a limited political status: Gibraltar under the sovereignty of the United Kingdom, North Cyprus recognised only from Turkey and Palestinian Territory occupied by Israel • Economic differences among countries: Rome, 11-12 june 2009 – FAO Head-Quarters

  5. The Mediterranean Region WYE CITY GROUP Rome, 11-12 june 2009 – FAO Head-Quarters

  6. The Mediterranean Region WYE CITY GROUP • Data available: • Dishomogeneous in different countries (different variables and frequency) • Sources (United Nations, World Bank, FAO, EUROSTAT, CIA and national statistical offices) • Missing data for southern Mediterranean countries, Balkan countries and city states • Annual Frequency • Sample 2000-2007 Rome, 11-12 june 2009 – FAO Head-Quarters

  7. The Mediterranean Region WYE CITY GROUP • List of variables: Rome, 11-12 june 2009 – FAO Head-Quarters

  8. The Mediterranean Region WYE CITY GROUP • Summary statistics: Rome, 11-12 june 2009 – FAO Head-Quarters

  9. Rural-Urban Classifications WYE CITY GROUP • Several territorial classification variables calculated on available data • Criteria: • Single indicator (population density is the default indicator) • Two combined indicators (population and agricultural density) • Multivariate clustering (two or three clusters) • Warning: no political or administrative area subdivision is purely urban or rural (i.e. distance of probability) Rome, 11-12 june 2009 – FAO Head-Quarters

  10. Rural-Urban Classifications WYE CITY GROUP • List of classification variables Rome, 11-12 june 2009 – FAO Head-Quarters

  11. The Panel Model WYE CITY GROUP • Fixed effects estimation: • Random effects estimation: Rome, 11-12 june 2009 – FAO Head-Quarters

  12. Results WYE CITY GROUP • The best starting model: Fixed-Effects Estimates. 192 observations. 24 cross-sectional units. Time-series length = 8. Dependent variable: gdppc *** indicates significance at the 1 percent level Mean of dependent variable = 12899.2 Standard deviation of dep. var. = 14119.3 Sum of squared residuals = 3.87401e+008 Standard error of the regression = 1523.08 Unadjusted R2 = 0.98983 Adjusted R2 = 0.98836 Degrees of freedom = 167 Durbin-Watson statistic = 0.35623 Log-likelihood = -1666.11 Akaike information criterion = 3382.23 Schwarz Bayesian criterion = 3463.66 Hannan-Quinn criterion = 3415.21 Test for differing group intercepts: Null hypothesis: The groups have a common intercept Test statistic: F(23, 167) = 112.524 with p-value = P(F(23, 167) > 112.524) = 2.93402e-089 Rome, 11-12 june 2009 – FAO Head-Quarters

  13. Results WYE CITY GROUP Fitted and Actual Plot by Observation Number (best Fixed effects model) Rome, 11-12 june 2009 – FAO Head-Quarters

  14. Results WYE CITY GROUP • The random effects estimation: Selected Models in Order of Efficiency (from left to right) Rome, 11-12 june 2009 – FAO Head-Quarters

  15. Results WYE CITY GROUP • The best final model: Random-Effects (GLS) Estimates. 168 observations. 21 cross-sectional units. Time-series length = 8. Dependent variable: gdppc * indicates significance at the 10 percent level ** indicates significance at the 5 percent level *** indicates significance at the 1 percent level Mean of dependent variable = 11864.4 Standard deviation of dep. var. = 11040.6 Sum of squared residuals = 4.88177e+009 Standard error of the regression = 5455.91 'Within' variance = 2.13143e+006 'Between' variance = 2.82017e+007 theta used for quasi-demeaning = 0.902803 Akaike information criterion = 3373.81 Schwarz Bayesian criterion = 3389.43 Hannan-Quinn criterion = 3380.15 Breusch-Pagan test - Null hypothesis: Variance of the unit-specific error = 0 Asymptotic test statistic: Chi-square(1) = 444.824 with p-value = 9.64932e-099 Hausman test - Null hypothesis: GLS estimates are consistent Asymptotic test statistic: Chi-square(4) = 2.58374 with p-value = 0.629706 Rome, 11-12 june 2009 – FAO Head-Quarters

  16. Results WYE CITY GROUP Fitted and Actual Plot by Observation Number (best Random effects model) Rome, 11-12 june 2009 – FAO Head-Quarters

  17. Concluding remarks and future developments WYE CITY GROUP • Results highlight a cross-sectional heterogeneity among the Mediterranean countries but the diagnostic analysis and fitting show that a common model for the available data is a satisfactory solution • Several rural-urban classification variables are significant in this panel data approach • A composite indicator, such as a combination of population density with agricultural density (i.e. rural_urban3 in this paper), undoubtedly improve per-capita income explanation Roma, 23 giugno 2009

  18. References • Agresti, A. (2002) Categorical Data Analysis, John Wiley & Sons, 2nd edition • Baltagi B. (2008) Econometric Analysis of Panel Data, John Wiley & Sons, 4th edition • FAO (2007) Rural Development and Poverty Reduction: is Agriculture still the key?, ESA Working Paper No. 07-02, Rome • Pizzoli E. and Xiaoning G. (2007a) How to Best Classify Rural and Urban?, Fourth International Conference on Agriculture Statistics (ICAS-4), Beijing, www.stats.gov.cn/english/icas • UNECE, FAO, OECD and World Bank (2005) Rural Household’s Livelihood and Well-Being: Statistics on Rural Development and Agriculture Household Income, Handbook, UN, New York, www.fao.org/statistics/rural Roma, 23 giugno 2009

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