Seminar: Is Cereal Price Subsidy Really Ineffective to the Poor? Evidence from China

Date and Time

Wednesday, March 16, 2016 - 14:00 to 15:00

Event type

Seminar

Location

Upper Meeting Room, LIDC, 36 Gordon Square, London WC1H 0PD

Speaker

Satoru Shimokawa is a Researcher at the Institute of Developing Economies, Japan. He has a PhD in Agricultural Economics from Cornell University and worked previously at Hong Kong University of Science and Technology. He specialises in the economics of agriculture and nutrition and in the Chinese economy. 

Speaker bio

Satoru Shimokawa (Institute of Developing Economies, IDE-JETRO)

Abstract

Although food-price subsidies are widely used to improve nutritional status of the poor, their effectiveness in improving nutritional status is still controversial. This paper proposes a new analytical framework to investigate the effectiveness by taking into account asymmetric impacts of introducing and removing the subsidies and by employing a non -income poverty measure (i.e., staple cereal shares). Using data from a randomized program of cereal price subsidies for urban poor households in China, we find that introducing the subsidies significantly increased total calorie intake among the poorest households while removing the subsidies had no significant effect on their total calorie intake because they stored cereals during the subsidy period, which implies consumption smoothing at a higher intake level. Among less-poor households, introducing the subsidies significantly increased their monetary savings rather than their nutrient intake while removing the subsidies had no significant effect. Without distinguishing between the asymmetric effects of introducing and removing the subsidies, the aggregate effects of the subsidies became smaller and insignificant.