How do Agricultural Subsidies affect the Income of Food- producing Household: a Mediated Moderation Model

Abstract

Abstract Increasing farmers’ income is critical to achieving the goals of rural revitalization and common prosperity, and has been a priority in the “three rural” work in China. With growing financial support for agriculture and a widening urban-rural income gap, understanding the relationship between agricultural subsidies and rural household income is crucial. 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 show that agricultural subsidies significantly promote the income of food-producing household, 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 elderly agricultural producers in the eastern region.