Does A Social Welfare Program Affect Farmland Use? Empirical Evidence Using Administrative Data in Taiwan

How does a social welfare program affect farmland use? This paper addresses this question by investigating the causal effect that a farmer’s pension program has on the amount of land enrolled in a farmland set-aside program by using a unique dataset in Taiwan as an illustration. The dataset was constructed by compiling administrative profiles of a farmland set-aside program and a farmer’s pension program in 2010. The final sample consists of 852,375 parcels of the set-aside land, and the regression discontinuity design model was estimated to cope with the endogeneity bias. Although the social welfare program and the farmland use program have different policy objectives, our empirical results indicate a significant interaction between these two programs. Landowners who received pension payments enrolled 14% more land into the farmland set-aside program than those who received no such payments. In term of policy relevance, our results suggest that a more effective farm safety net can be achieved by considering the interaction between the social welfare and farm production program.