Full Citation

Title: Optimal Agricultural Policy: Small Gains?

Citation Type: Miscellaneous

Publication Year: 2019

ISBN:

ISSN:

DOI: 10.13140/RG.2.2.21076.65928

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Abstract: Agricultural subsidies and transfers distort the allocation of workers across sectors, and may keep too many workers in agriculture. What are the benefits of implementing an optimal transfer system? We analyze this question in a general equilibrium model with endogenous sector selection calibrated to the US economy. Eliminating distortions has three main effects: (1) small efficiency gains, (2) small income losses for agricultural workers, (3) a significant rise in the price of agricultural goods, which hurts lower-income agents in all sectors. In addition to the welfare analysis of the optimal policy reform, we also use the model to quantify the impact of the retaliatory tariffs imposed by the Chinese Government on US agricultural exports in 2018. The lump-sum transfers needed to compensate agricultural workers are modest (roughly 2% of aggregate agricultural income), when workers can reallocate between sectors. the seminar participants at the CJP Workshop at the University of Minnesota and the Deparement of Economics seminar at CSUEB for valuable discussions and comments. Any remaining errors are our own. Authors' declarations of interest: none.

Url: https://www.researchgate.net/publication/331801411

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Authors: Rebessi, Filippo; Ding, Kai

Publisher: California State University

Data Collections: IPUMS USA, IPUMS CPS

Topics: Other

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