Money for operator: the impact of linked agricultural subsidy on incomes

Abstract

Abstract The reform of China’s “three subsidies” has shifted the method of subsidization from payment based on the contracted area to payment based on the actual operational area. Within this context, studying the income-generating impact of the “three subsidies” holds significant practical relevance. Using data from the 2018 China Labor-force Dynamic Survey, this paper employs basic estimation, mediating effect, and moderating effect models to analyze the heterogeneity of agricultural subsidies’ impact on rural household income, the mediating effect of agricultural mechanization, and the moderating effect of operation scale. Our findings indicate that agricultural subsidies, known as the “three subsidies”, have increased total rural household income and agricultural income while decreasing wage income. However, they have shown no significant impact on business income. Notably, agricultural subsidies have significantly elevated the income of food-producing households, with agricultural mechanization partially mediating this effect. Operation scale positively moderates the impact of agricultural subsidies on rural household income and agricultural mechanization. Heterogeneity analysis indicates that agricultural subsidies have a more significant impact on rural household income among agricultural producers in the eastern region.