China's New Rural Income Support Policy: Impacts on Grain Production and Rural Income Inequality
AbstractThis paper analyses the impact of agricultural tax abolition and direct income payments to grain farmers on grain production and rural inequality in China. To separate the impact of the income support measures from recent price trends for grains and inputs, and to account for differences in household responses, we use a village-level general equilibrium model that we calibrate for two villages with different degrees of market access in Jiangxi province. The results show that the income support policy does not reach its goal of promoting grain production. The increased incomes allow farm households to buy more inputs for livestock production and involve other activities that are more profitable than grain farming. Selling of rice outside the villages declines more than rice production, because households in the villages consume more rice when incomes rise. We further find that the income support measures tend to reduce income within a village, but that tax abolition tends to widen income inequality between villages. Copyright The official journal of The Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS) 2006.
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Bibliographic InfoArticle provided by Institute of World Economics and Politics, Chinese Academy of Social Sciences in its journal China & World Economy.
Volume (Year): 14 (2006)
Issue (Month): 6 ()
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Other versions of this item:
- Heerink, Nico & Kuiper, Marijke H. & Xiaoping, Shi, 2006. "China's New Rural Income Support Policy: Impact on Grain Production and Rural Income Inequality," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25625, International Association of Agricultural Economists.
- O20 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - General
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
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