Food subsidies in general equilibrium

• 成果类型: Article
• 署名作者: Hummel, Albert Jan; Ziesemer, Vinzenz
• 署名单位: University of Amsterdam; Tinbergen Institute; Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2023.104882
• 发表日期: 2023
• 关键词: Uniform consumption taxes; General equilibrium effects; Food subsidies

摘要

The Atkinson-Stiglitz theorem on uniform consumption taxation breaks down if prices are endogenous. This paper investigates the implications for optimal food subsidies in China. To do so, we build a general equilibrium model where low-skilled workers have a comparative advantage in the production of food. Food subsidies raise the relative demand for low-skilled workers, which reduces the skill premium and indirectly redistributes income from high-skilled to low-skilled workers. The optimal food subsidy bal-ances these distributional gains against the costs of distorting consumption decisions. We calibrate our model to match key moments from the Chinese economy, including sectoral production and spending patterns that we obtain from micro-level survey data. Our results suggest that general equilibrium effects rationalize only very modest food subsidies that generate tiny welfare gains. (c) 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).