The Impact of Government Subsidies on Income Inequality Among Farm Households in China: Evidence from CFPS Panel Data

Effectively measuring the income-generating effects of government subsidies is an important issue in assessing agricultural policies and implementing precision poverty alleviation. This study utilizes panel data from the China Family Panel Studies (CFPS) to screen a sample of 13,583 individual residents. We empirically analyze the impact of government subsidies on income inequality among farm households using fixed effects models, quantile regressions, and mediated effects models. Our study found that the following results: (1) The mechanism of subsidy action combines the functions of increasing income and regulating income distribution. Marginal benefits to low-income groups are more obvious. (2) Increasing productive agricultural inputs can reduce the income gap of farmers, which is more significant than the direct subsidy of funds. (3) The incentive effect of subsidies is strongest in the Northeast and weakest in the East. Compared to middle-aged and older farmers, the utility level of the subsidy is stronger in the youth group.