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Engel curve, farmer welfare and food consumption in 40 years of rural China

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  • Xiaohua Yu

Abstract

Purpose - The purpose of this paper is to review the theoretical background, methodological extensions, and empirical applications of the Engel curve, which is applied to the research of the change in farmers’ welfare and food demand in China after the economic reform in 1978, compared with the statistics of income and food consumption. Design/methodology/approach - This paper mainly uses the traditional method of Engel curve, which is compared with income growth and food consumption, to study farmers’ welfare improvement in rural China. Findings - The Engel coefficients identify three different stages for farmers’ welfare change after 1978. The first stage is the period between 1978 and 1988, in which farmers’ welfare has been continuously enhanced due to the institutional bonus of the 1978 economic reform and increased government purchase price of agricultural products. The second stage is the period between 1989 and 1995, in which farmers’ welfare has been slightly deteriorated mainly due to the end of institutional reform bonus, suppressed food prices, relative high inflation, and instable political situation. The third stage is the period after 1995, in which farmers’ welfare returns to a growing path, as the dual price system was abolished, the transition from a planned economy to a market economy had been completed, and the government carried out protective policies for agriculture and started to heavily subsidize agriculture. The Engel coefficient still remained at a very high level at 0.59 in 1995, but it continuously decreased to 0.33 in 2015. The welfare enhancement for farmers mainly results from deepened market-oriented reform, protective policies for agriculture, and prevalent off-farm employment. The Engel coefficient is also linked to food demand elasticities. Along with the decreasing Engel coefficient in the past 40 years, income elasticities also continuously decrease from 0.55 in 1978 to 0.08 in 2015. Food demand is very inelastic now, and any further increase in income will not substantially increase food demand any more. Research limitations/implications - Inequality has not been analyzed. Originality/value - This paper reviews the methodological advantages of the Engel curves, and uses it to identify different stages of welfare change and estimate income elasticities of food demand for farmers in China after the 1978 economic reform.

Suggested Citation

  • Xiaohua Yu, 2018. "Engel curve, farmer welfare and food consumption in 40 years of rural China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 10(1), pages 65-77, February.
    • Handle: RePEc:eme:caerpp:caer-10-2017-0184
    DOI: 10.1108/CAER-10-2017-0184
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    Cited by:

    1. Xiaodong Zheng & Yinglin Wang & Yue Zhang & Tinghe Deng & Yuanzheng Yang, 2022. "Impacts of COVID-19 Pandemic on Dietary Consumption among Chinese Residents: Evidence from Provincial-Level Panel Data," IJERPH, MDPI, vol. 19(13), pages 1-16, June.
    2. Nie, Wenjing & Abler, David & Li, Taiping, 2021. "Grading attribute selection of China's grading system for agricultural products: What attributes benefit consumers more?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).
    3. Zhou, De & Yu, Xiaohua & Abler, David & Chen, Danhong, 2020. "Projecting meat and cereals demand for China based on a meta-analysis of income elasticities," China Economic Review, Elsevier, vol. 59(C).
    4. Wang, Yahui & Li, Xiubin & He, Huiyan & Xin, Liangjie & Tan, Minghong, 2020. "How reliable are cultivated land assets as social security for Chinese farmers?," Land Use Policy, Elsevier, vol. 90(C).
    5. Wanli Ma & Liangze Mu, 2024. "China’s Rural Revitalization Strategy: Sustainable Development, Welfare, and Poverty Alleviation," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 174(2), pages 743-767, September.
    6. Zheng, Hongyun & Ma, Wanglin, 2023. "Impact of agricultural commercialization on dietary diversity and vulnerability to poverty: Insights from Chinese rural households," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 558-569.
    7. Komeil Mahjori Karmozdi & Mohammad Reza Kohansal & Mohammad Ghorbani, 2020. "Sustainable economic rural development system pattern in Ghaemshahr: an application of the developed TOP-MARD core model," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(6), pages 5793-5817, August.
    8. Xiuquan Huang & Tao Zhang & Xi Wang & Jiansong Zheng & Guoli Xu & Xiaoshan Wu, 2024. "Regional differences of agricultural total factor carbon efficiency in China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    9. Xinru Han & Ping Xue & Wenbo Zhu & Xiudong Wang & Guojing Li, 2022. "Shrinking Working-Age Population and Food Demand: Evidence from Rural China," IJERPH, MDPI, vol. 19(21), pages 1-15, November.
    10. Dai, Xiao-wen & Sun, Zhanli & Müller, Daniel, 2021. "Driving factors of direct greenhouse gas emissions from China’s pig industry from 1976 to 2016," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 20(1), pages 319-329.
    11. Ting Jin & Lei Li, 2022. "Does Smartphone Use Improve the Dietary Diversity of Rural Residents? Evidence from Household Survey Data from 5 Provinces," IJERPH, MDPI, vol. 19(17), pages 1-16, September.
    12. Nie, Wenjing & Li, Taiping & Zhu, Liqun, 2020. "Market demand and government regulation for quality grading system of agricultural products in China," Journal of Retailing and Consumer Services, Elsevier, vol. 56(C).
    13. Binglu Wu & Wenzhuo Liang & Jiening Wang & Dongxu Cui, 2022. "Rural Residents’ Perceptions of Ecosystem Services: A Study from Three Topographic Areas in Shandong Province, China," Land, MDPI, vol. 11(7), pages 1-21, July.
    14. Han, Xinru & Li, Guojing, 2021. "Shrinking Working-Age Population and Food Demand: Evidence from Rural China," 2021 Conference, August 17-31, 2021, Virtual 315000, International Association of Agricultural Economists.

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