Research On Agricultural Policy Change And Rural Household’s Behavoir

As a developing country with the population of over 1.3 billion,grain security plays an important role in China including national stability and economic growth. It is the core issue for policy makers to ensure grain security. In fact,the first decision for the Chinese government is to solve the problems of“rural area,agriculture and famer”. Since the 21 st century,agricultural policy in China has taken place a fundamental transformation from“taking away from agriculture”to“supporting agriculture”.During this transformation process,grain yield fluctuated dramatically. Grain yield declined continuously from more than 500 million tons in 1999 to 430 million tons in 2003 in China,and then it increased in succession to 600 tons in 2013. However,some questions are still needed to be answered: what is the mechanism of agricultural policy change? How does it affect the farm households’ behaviors? What factors lead to the continuous growth of total grain output?How to use knowledge of economics to explain those?In order to answer the above questions,we summarize agricultural policy and its evolution since the reform and opening-up policy in China,build the mechanism framework of agricultural policy change according to the new institutional economics and modern economics in theory and the research methods of descriptive statistics,econometric analysis and modeling. We empirically analyze the impact of agricultural policy changes on production and consumption behavior of farm households including the macroscopic and microscopic aspects. On this basis, from the perspective of the reform of income distribution,we analyze the performance of agricultural policy changes theoretically and empirically. Finally we put forward the corresponding policy implications. Specifically,this dissertation is organized as follows:Firstly,based on the institutional change theory,we develop the analysis framework of agricultural policy change from the perspective of multiple logics of institution,and then examine the generating process of the rural taxation reform. We find that the logic of national behavior is the legitimacy and stability,the logic of basic level of government’s behavior is the promotion in bureaucracy system and that the logic of farm household’s behavior is economic rationality. The agricultural policy change is the result of interaction of three kinds logic constraints to the institutional environment and the ideological change in the long run.Secondly,we use the statistical description to analyze the impact of agricultural policy change on agricultural production and output from the macro and micro perspectives based on the data from the fixed observation points of six provinces and national statistics in China. We find the closely relationship between agricultural policy changes and agricultural production and planting structure since the new century. It means farmers can make rational response to agricultural policy change. This results lay a foundation for the following empirical analysis. At the same time,it is consistent with the logic of farm households’ behaviors in the first section.Thirdly,we make use of the farm household survey data,develop the fixed effect model to study how the taxation and agricultural subsidy affect the farm households’ behaviors. Results show that the rural taxation reform and agricultural subsidies significantly arouse farmers’ enthusiasm to plant grains,but the effect exists difference in regional. We find that from the static view rural taxation reform increases the average output by 6.82% in rice-growing areas and increases by 7.25% in wheat-growing area. However, there is no significant effect on corn-growing area. From the perspective of generating process,the impact of taxation reform is mainly reflected in the process of reform in wheat and maize growing areas,but after reform in the rice-growing area. From the dynamic view,the impact of rural taxation reform on agricultural output increases at first and decreases later. As for agricultural subsidies,this policy has significant impact on agricultural output,and the impact gradually enhances from the rice-growing area to corn-growing area. Additionally,agricultural subsidies lead to significant increase of capital investment and decrease of the labor input,promote farmers to adjust input portfolio and change elasticity of input factors,but there exists significant regional differences.Fourthly,on the basis of the agricultural growth equation,we develop the agricultural production function with rural taxation and agricultural subsidies from the perspective of income distribution. We decompose the effect of agricultural policy changes and price increases on the agricultural TFP in theory,and then do empirical analysis using data collected in six provinces from 2000 to 2011. We find that the performance of agricultural policy changes is significant,which is the main reason of the continuous increase of grain output. Specifically,the agricultural TFP growth accounts for 54.13%,the labor increase accounts for 29.61%,fertilizer increase accounts for 6.61%,capital accountes for 5.23% and land accountes for 4.42%. But due to the different levels of regional agriculture development and difference of natural resource endowments,the inputs increase is the primary factor in rice and corn growing areas,while the agricultural TFP growth caused by agricultural policy change is the primary reason in wheat-growing area.Finally,we construct the consumption model of farm household with the hypothesis of life cycle theory,and empirically analyze the different sources of income of farmers consumption tendency using the method of system GMM. It shows that government transfers income has the highest propensity to consume,which is four times of household operation income,and that the transformation from“taking away from agriculture”to“supporting agriculture”helps to increase farmers’ consumption and expand domestic demand. At the same time,there exists regional differences. The government transfers has the highest propensity to consume in wheat-growing area,followed by corn-growing area and rice-growing area.Based on the above research,we put forward the following policy implications. Firstly,the rational behavior of farm household directly affect the macro agricultural policy choice space or opportunity set. Therefore,policy makers should respect farmers’ willingness and spouse farmers’ initiative. Secondly,the rural taxation reform and agricultural subsidies have significantly positive impacts on farmers’ decisions, which means that farmers can make rational response to agricultural policy change. Therefore,it is important to optimize the structure of agricultural subsidies and to increase grain subsidies for the major grain-growingareas to ensure national grain security. Thirdly,the government transfer income has the highest propensity to consume,so increasing agricultural subsidies helps to improve the level of farm household consumption and expand domestic demand. Forthly,the impact of the agricultural policy changes on farmer product and output are different significantly in regions. Moreover,the continuous increase has different reasons in regions. Therefore,we propose that the supportive policies should pay attention to the characters of different regions. Finaly,the performance of agricultural policy changes goes down as time goes by,and hence the agricultural policy reform consistent with farmers’ rational expectations is helpful to improve farmers enthusiasm and ensure national food security.This paper has three contributions just as summarized as follows. Frist,agricultural policy changes belong to institutional change proposed by North. Using the multiple logic framework of institutional change,we analyze the interaction of three kinds of logics subjected to the given institutional environment and the changing ideological in the long-termand so the process of agricultural policy change gets new explanation. Furthermore,we develop the accounting equation of agricultural growth with rural taxation and agricultural subsidies from the perspective of income distribution,and decompose the performance of agricultural policy changes theoretically and empirically. Thirdly,we use“mental accounts”of behavioral economics to analyze the difference of propensity to consume from different sources of income,which is different from the existing literature which explained the propensity to consume in different sources of income based on the stability or variability of income.