The effect of grain subsidies on the production and farmers' income in China

Abstract

In this paper, we examine if China's grain subsidies improve the output of grain and the agricultural income of farmers using our collected rural household survey data from 10 provinces. We construct the production function to estimate the effect of four types of subsidies on the grain output and find that quality seed subsidy can increase the wheat output, input subsidy can increase the production of rice and the grain subsidies can increase in production of corn except agricultural machinery. We obtain the treatment effect on the agricultural income by propensity score matching method. It is not the same as previous and shows that the four types of the grain subsidies are not associated with agricultural income of household.