Food Security, Structural Transformation, and Welfare

Abstract

This study examines the effects of food-security policies in China, focusing on a national program that prioritized grain production in 800 counties after 2010. We find that these counties experienced a significant decline in cash crop production and agricultural employment, with a limited increase in grain output. Using a spatial equilibrium model that incorporates sectoral choices, crop choices, and migration barriers, we assess the aggregate impacts of the program and alternative policies. Our analysis shows that the national program boosted aggregate GDP but reduced agricultural output and welfare. While subsidizing grain production would increase agricultural output, it would negatively affect aggregate GDP. Subsidizing agricultural intermediates would enhance agricultural output and welfare with a negligible impact on aggregate GDP, but would worsen the already severe agricultural pollution.

Keywords: food security, crop choices, structural transformation

JEL Classification: O11, O15, O41, Q18, R13