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Agricultural subsidies retard urbanisation in China

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  • Kaixing Huang
  • Wenshou Yan
  • Jikun Huang

Abstract

Although agricultural subsidies are usually seen in high‐income countries with small agricultural labour forces, China started to heavily subsidise agriculture when its per‐capita income was very low and more than half of its population was working in agriculture. A concern is that these abnormal agricultural subsidies may have significantly retarded China’s urbanisation process by reducing rural–urban migration. Based on a panel of county‐level data from 1,878 Chinese counties, we found that agricultural subsidies reduced China’s yearly outflow of agricultural labour by 0.68 million people (with a 95 per cent confidence interval of 0.67–0.69) – about 5.7 per cent of the annual rural–urban migration observed during the sample period. We concluded that abnormal agricultural subsidies are a significant cause of China’s widely observed under‐urbanisation.

Suggested Citation

  • Kaixing Huang & Wenshou Yan & Jikun Huang, 2020. "Agricultural subsidies retard urbanisation in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1308-1327, October.
    • Handle: RePEc:bla:ajarec:v:64:y:2020:i:4:p:1308-1327
    DOI: 10.1111/1467-8489.12391
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    2. Sheng, Jichuan & Wang, Hui, 2022. "Participation, income growth and poverty alleviation in payments for ecosystem services: The case of China's Wolong Nature Reserve," Ecological Economics, Elsevier, vol. 196(C).
    3. Xinru Han & Ping Xue & Ningning Zhang, 2021. "Impact of Grain Subsidy Reform on the Land Use of Smallholder Farms: Evidence from Huang-Huai-Hai Plain in China," Land, MDPI, vol. 10(9), pages 1-15, September.
    4. Fan, Pengfei & Mishra, Ashok K., 2022. "The Impact of Agricultural Support and Protection Subsidies on Grain Production in China," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322474, Agricultural and Applied Economics Association.

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