Ration Subsidies and Incentives in the Pre-reform Chinese Commune.

A central feature of the "egalitarianism" said to have undermined work incentives in Chinese agricultural produ ction teams during the 1960s and 1970s was the distribution of grain rations independently of work contribution. This paper analyzes two m odels of grain rationing, one drawn from existing theoretical literat ure and the other perhaps more closely based on Chinese practice. It finds that a scheme of the type commonly depicted was more costly to operate but provided better incentives to labor-poor households. Unde r both schemes, however, the scope for material incentives was reduce d by grain ration guarantees, and was smaller the poorer the team. Copyright 1988 by The London School of Economics and Political Science.