Reforms, incentives, welfare and productivity growth in Chinese wheat production

Following the rural reform in 1978 a series of agricultural reforms were introduced in China with an aim to create incentives for the farmers to produce more. The nineties' price reform that was aimed at deregulating the agricultural market eventually resulted in a huge drop in agricultural production; this apparently motivated the government to take over the control of agricultural prices in 1998. For a dataset that covers all the major rural reforms undertaken in China, we examine how and to what extent these reforms affected the productivity and welfare of wheat farmers in China. We find that the nineties price reforms resulted in a high magnitude of effort-response from wheat farmers which led to a faster growth of the incentive component of productivity