Subsidies and farming: A microempirical analysis of financial allocation to promote agricultural production

Agriculture's stable development is vital to the national economy, and its vulnerability justifies fiscal support. On the basis of data from the China Family Panel Studies from 2012 to 2022, this study examines how fiscal allocation affects agricultural production, particularly rural households' grain-growing enthusiasm and their productive income. Results show that public expenditure significantly boosts agricultural production, supported by ordered probit and ordinary least squares fixed effect models and confirmed in robustness tests. Mechanistic tests indicate that agricultural public expenditure promotes agricultural production by improving agricultural technical levels, enhancing production services, and expanding the agricultural scale. Heterogeneity analysis shows that agricultural public expenditure has a stronger effect on grain-growing enthusiasm among low-educated rural households and on productive income in major grain production areas. It also has a stronger effect on productive income for rural households with emerging and prime-aged farmers, in nonmajor grain production areas, and those with high educational attainment. The research offers empirical insights for exploring ways to achieve the 'dual goals' of food security and poverty alleviation.