Unravelling the bidirectional impact of Chinese agricultural subsidy policy on agricultural efficiency and farmers' income through panel data analysis

Yungang Tang, Haojie Liao, Ye Wu and Gang Lei
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Yungang Tang: Guangdong Provincial Key Laboratory of Public Finance and Taxation with Big Data Application, Guangdong University of Finance and Economic, Guangdong Guangzhou, P. R. China
Haojie Liao: School of Accounting and Auditing, Guangxi University of Finance and Economics, Nanning, P. R. China
Ye Wu: Guangdong Provincial Key Laboratory of Public Finance and Taxation with Big Data Application, Guangdong University of Finance and Economic, Guangdong Guangzhou, P. R. China
Gang Lei: School of Management, Guangdong University of Science and Technology, Guangdong Dongguan, P. R. China

Agricultural Economics, 2024, vol. 70, issue 4, 165-177

Abstract: This study examined the bidirectional impact of Chinese agricultural subsidy policies on agricultural efficiency and farmers' income. It employed panel data from 2004 to 2020 across 31 Chinese provinces, and the three-stage least squares method was used for simultaneous estimation. Different regions and farmer types were analysed separately. The findings revealed a significant bidirectional impact of the agricultural subsidy policy on agricultural efficiency and farmers' income, signifying a strong positive feedback loop. Varied types and levels of subsidy policies differently impacted regions and farmer categories, showcasing diverse outcomes and adaptive responses to subsidy policies. The ratio of total subsidy to GDP (SUBGDP) positively impacted production efficiency and per capita disposable income. This result suggests that the subsidy policy helped enhance agricultural production efficiency and increased farmers' income levels. Conversely, the ratio of various subsidies to the total subsidy manifested different directions and degrees of impact on production efficiency and per capita disposable income, suggesting areas where the subsidy policy framework can be optimised. In addition to presenting a theoretical discussion on agricultural subsidy policies, this study provides theoretical insights and policy recommendations for the formulation and implementation of an optimal agricultural subsidy policy.

Keywords: income level; per capita disposable income; production efficiency; rural society (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:70:y:2024:i:4:id:335-2023-agricecon

DOI: 10.17221/335/2023-AGRICECON

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