Cash Transfers and Multiplier Effect: Lessons from the Grain Subsidy Program in China
2017
Yi, Fujin | Lu, Wuyi | Zhou, Yingheng
This study examines the multiplier effects of the grain subsidy program in China, which is a largefood self-sufficiency project that is implemented as a cash transfer program. Income multipliereffects have not been examined in the evaluation of the grain subsidy program although increasingthe income of farmers is the original goal of this project. A large number of household-levelobservations are employed to measure the program’s income multiplier. Results show that the grainsubsidy program has an unrealized high income multiplier, and the income promotion effect of thetransferred subsidies is from agricultural production derived by intensifying various input uses foreach unit of land. The multiplier effect can be particularly utilized by households with goodeducation and poor farmers in less developed regions. Hence, to maximize the income multipliereffect, the grain subsidy distribution method should consider these criteria instead of retaining theprevalent standard that is based on contracted land areas.
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