Can Agricultural Subsidies Reduce Cropland Abandonment in Rural China?

Abstract

Cropland abandonment has significant implications for sustainable agricultural development. Whether agricultural subsidies can reduce cropland abandonment is correlated with China’s food security. Relying on the China Labor-force Dynamics Survey (CLDS) data and the two-way fixed effects model, this study investigates the implications of agricultural subsidies on cropland abandonment and its influence mechanism. The results demonstrate that agricultural subsidies effectively reduce cropland abandonment, which is robust after robustness and endogeneity tests. Mechanism analysis indicates that agricultural subsidies inhibit cropland abandonment by incentivizing farmers to increase agricultural production inputs and facilitate cropland transfer. Heterogeneous analysis reveals that agricultural subsidies yield more significant benefits in eastern and central regions and plain and hill areas, particularly among households with higher degrees of part-time employment. Moreover, the effect of agricultural subsidies on cropland abandonment is greater in households with higher levels of population aging. These findings complement existing research on the impact of agricultural subsidies on agricultural production and offer valuable insights for policymakers devising strategies to curb cropland abandonment and foster sustainable agricultural development.

1. Introduction

At the 1996 World Food Summit, the Food and Agriculture Organization of the United Nations (FAO) defined food security as a state in which all people, at all times, have physical and economic access to sufficient, safe, and nutritious food to meet their dietary needs and preferences for an active and healthy life [1,2]. China faces a structural imbalance between grain supply and demand [3]. In 2024, China’s grain output reached a record high of 707 million tons (data source: National Bureau of Statistics, https://data.stats.gov.cn/easyquery.htm?cn=C01 (accessed on 22 March 2025)). However, grain imports totaled 158 million tons, accounting for 22% of total production, including 105 million tons of imported soybeans, which constituted 66% of total imports (data source: General Administration of Customs of the People’s Republic of China, http://www.customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302277/302276/6325284/index.html (accessed on 22 March 2025)). Ensuring food security remains a pressing issue. Cropland is the foundation for agricultural production and is imperative for food security. Despite China’s vast population, it possesses only 9% of the global cropland and less than 0.1 ha of cropland per capita, far below the world’s average [4]. The implementation of the household contract responsibility system in 1978 significantly bolstered Chinese farmers’ enthusiasm to cultivate additional cropland to meet rising food demands. Over the period from 1978 to 2022, the cropland area expanded by approximately 1.28 times, from 99 Mha to 128 Mha. The China Agricultural Outlook Report 2024–2033 forecasts that China’s food self-sufficiency rate will reach 92% over the next decade (data source: https://www.gov.cn/yaowen/liebiao/202404/content_6946544.htm (accessed on 6 February 2025)). While historical trends and projections suggest that feeding China’s 1.4 billion people is manageable, a critical concern arises: the continuous expansion of new cropland is juxtaposed with abandoning existing cropland. Data reveal that from 1992 to 2015, China witnessed 56 Mha of cropland abandonment, comprising 19% of the total cropland [5]. In 2022, there were 31 Mha of abandoned cropland [6]. The cropland abandonment ratio in Southern Sichuan, China, escalated from 2% in 2003 to 15% in 2018 [7]. In 2017 and 2019, approximately 9% of farmers abandoned cropland [8]. While it may seem that the abandoned cropland is inherently unproductive, recent research indicates that 83% remains suitable for cultivation [6]. Given the limited availability of cropland, cropland abandonment not only wastes valuable land resources and contributes to food loss but also incurs substantial economic costs for reclamation, which increase with the duration of abandonment. This outcome contradicts the principle of sustainable development, which seeks to meet present needs without compromising the ability of future generations to meet theirs [9,10]. Therefore, reducing cropland abandonment supports sustainability.

The household contract responsibility system considers soil fertility and geographical conditions to allocate cropland equitably among farmers. However, this approach has resulted in significant land fragmentation, hindering agricultural mechanization and moderate-scale operations while increasing production costs [11,12]. As the marginal utility of the household contract responsibility system declines, rising production costs and expanding off-farm employment opportunities gradually diminish the importance of agricultural production for farmers. Agricultural income has transitioned from a primary to a secondary source of household income [13]. To reignite farmers’ motivation for agricultural production and revitalize China’s agricultural sector, the Chinese government initiated a direct grain subsidy pilot program in Anhui and Jilin Provinces in 2002, extending it nationwide in 2004. As China’s agricultural subsidies framework improved, the country systematically developed a comprehensive system that includes a quality seed subsidy, direct grain subsidy, aggregate input subsidy, and machinery purchase subsidy. In 2016, the Chinese government restructured this policy, realigning the focus toward preserving cropland fertility and encouraging moderate-scale grain management. Agricultural subsidies surged from 51 billion RMB in 2007 to 164 billion RMB in 2012 (data source: China Rural Statistical Yearbook), significantly contributing to China’s consecutive increase in grain output.

This shows that agricultural subsidies can positively promote agricultural production [14,15,16,17]. For example, agricultural subsidies have increased farmers’ motivation for agricultural production and facilitated cropland transfer [18,19,20]. Heightened motivation means farmers will increase agricultural production inputs and maximize cropland use [14,20]. The 2003 reform of the European Union’s Common Agricultural Policy (CAP) regarding agricultural subsidy payments increased incentives for Swedish farmers to adopt organic farming, resulting in a significant increase in the prevalence of organic farming [21]. Vu et al. [22] found that implementing price subsidies, combined with the disclosure of experiential information, significantly increased the use of organic fertilizers among local farmers. By adjusting payment methods and offering empirical insights, agricultural subsidies have further improved agricultural production inputs and promoted sustainable agricultural development. Facilitating cropland transfer allows farmers to lease out excess cropland, mitigating cropland abandonment [23,24,25,26]. Theoretically, agricultural subsidies can curb cropland abandonment. However, in China, the contractual rights and operational rights of cropland are distinct. While agricultural subsidies are primarily allocated based on the contracted area [27], this allocation method can result in a disconnect between the recipients of agricultural subsidies and the actual agricultural production [28]. Consequently, there is a contention that agricultural subsidies inadequately incentivize agricultural production [27]. Thus, agricultural subsidies have transitioned into income supplements for cropland contractors, deviating from the original purpose of the agricultural subsidies policy [29,30]. Various studies propose enhancing grain income as a key strategy to combat cropland abandonment, with increasing agricultural subsidies as a viable solution [31,32,33,34,35]. Nonetheless, the efficacy of agricultural subsidies in curbing cropland abandonment requires empirical validation. If agricultural subsidies do not deter cropland abandonment, then the strategy of reducing cropland abandonment by increasing agricultural income needs to find new solutions.

This article uses large-scale household survey data to provide the first empirical estimates of the relationship between agricultural subsidies and cropland abandonment. Using two periods of panel data from the China Labor Dynamics Survey (CLDS) and the two-way fixed effects (TWFE) model, we explore the impact of agricultural subsidies using the total agricultural subsidies farmers receive on cropland abandonment measured by the cropland abandonment ratio. To ensure robust results, we conduct several tests, including robustness tests and an endogeneity test. These tests involve replacing the core explanatory and dependent variables, using balanced panel data, clustering at the village level, and using instrumental variables. Furthermore, we investigate the mechanisms of how agricultural subsidies affect cropland abandonment, focusing on their role in increasing agricultural production inputs and facilitating cropland transfer. Moreover, we also investigate the heterogeneous effects of agricultural subsidies on cropland abandonment, accounting for regional, terrain, off-farm employment, and population aging differences.

Our results suggest that agricultural subsidies significantly reduce cropland abandonment, which is robust after robustness and endogeneity tests. Specifically, agricultural subsidies encourage farmers to reduce cropland abandonment by increasing agricultural production inputs and facilitating cropland transfer. In addition, the heterogeneous analysis shows that cropland abandonment becomes more responsive to agricultural subsidies in eastern and central regions and plain and hill areas, particularly among households with higher degrees of part-time employment. Moreover, agricultural subsidies’ sensitivity to cropland abandonment increases with higher levels of population aging.

Our study contributes in three key ways. First, cropland use decisions are farmers’ initial consideration before agricultural production. Existing literature on the impact of agricultural subsidies has primarily focused on the sown area [36], production inputs [20], production efficiency [37], farm income [38], and output levels [39,40] while largely neglecting their influence on cropland abandonment. We examine how agricultural subsidies influence cropland abandonment by affecting farmers’ cropland use decisions in response to changes in resource endowments. Using large-scale household survey data and rigorous econometric methods, we empirically validate the inhibitory effect of agricultural subsidies on cropland abandonment. This research significantly improves the understanding of how agricultural subsidies impact agricultural production and fills existing gaps in the literature. Second, we identify two primary mechanisms through which agricultural subsidies reduce cropland abandonment: increasing agricultural production inputs and facilitating cropland transfer. We further explore heterogeneous effects across regions, terrains, off-farm employment, and population aging. Our findings highlight that infrastructure and resource endowment are critical to the effectiveness of agricultural subsidies in reducing cropland abandonment. Moreover, agricultural subsidies remain an effective policy tool to inhibit cropland abandonment in the context of rising off-farm employment and an aging rural population. Third, while some studies have suggested that agricultural subsidies can curb cropland abandonment, few have empirically tested this claim. Our study provides evidence supporting the view that agricultural subsidies are an effective strategy for reducing cropland abandonment.

The second section reviews the prior studies. The third section presents a conceptual model. The fourth section introduces data sources, variable descriptions, and the econometric method. The fifth section elaborates on empirical results, including benchmark regression, robustness tests, endogeneity tests, mechanism analysis, and heterogeneity analysis. The sixth section is the conclusion and policy implications.

2. Literature Review

2.1. The Related Literature of Agricultural Subsidies and Cropland Abandonment

Government policies significantly shape industrial development [41], with agricultural subsidies as a supportive measure to enhance grain production, increase farmers’ incomes, foster sustainable agricultural growth, and ensure national food security. In recent years, numerous studies have explored the contribution of agricultural subsidies to the agricultural industry. Agricultural subsidies, by giving direct financial support to farmers, greatly motivate agricultural production [36]. Farmers frequently encounter credit constraints due to limited production resources [42]. Nevertheless, shortcomings in credit markets hinder farmers from easing their credit limitations through external avenues [43]. Agricultural subsidies can offer liquidity to farmers, alleviating such financial burdens [36]. Monetary and material subsidies help alleviate the resource constraints faced by farm households, encouraging more significant investment in agricultural production. Research conducted in China’s primary grain-producing regions has shown that agricultural subsidies can prompt farmers to enhance their investment in agricultural materials and machinery, with these mediating effects contributing 25% to the production increase [20]. Additionally, agricultural subsidies act as a safety net, easing concerns about declining agricultural income, particularly for risk-averse farmers, and motivating them to boost agricultural production inputs [44]. Xu et al. [29] viewed agricultural subsidies as another form of tax reduction, verifying that these subsidies incentivize farmers to increase agricultural production through increased labor, land, and material inputs. Based on DID, Meng [45] discovered that agricultural subsidies help curb the outmigration of food growers, indicating a pull factor that encourages labor to return to the agricultural sector. Ultimately, the agricultural subsidy policy has boosted the area of food cultivation and achieved increased food production [36,46]. This increased crop production has bolstered cultivation income and profitability, further spurring farmers to enhance production scale and facilitate cropland transfers [19]. Wang et al. [47] used the farm household-level survey data to establish that agricultural subsidies can encourage cropland transfer. By facilitating cropland transfer to expand production scale, agricultural subsidies contribute to economies of scale for large-scale farmers [48]. While existing literature has predominantly focused on the impact of agricultural subsidies on food production, there is a need for further investigation into how these subsidies influence the cropland utilization decisions of farm households.

Farmers aim to efficiently allocate their limited productive resources to maximize profits on contracted cropland. The quality of the cropland plays a crucial role in determining the allocation of productive resources [49]. Lower-quality cropland can only receive fewer resources or be directly abandoned. Therefore, parcel characteristics are the primary factors that influence cropland abandonment. Gellrich et al. [50] used spatial statistical modeling to investigate the regional patterns of abandoned cropland, highlighting associations between cropland abandonment and factors such as shallow soils, steep slopes, and inadequate road infrastructure. He et al. [32] determined that land quality, irrigation conditions, and distance from settlements significantly affect cropland abandonment in Guizhou and Jiangxi provinces, China. Considering profit maximization, the cost/benefit ratio of crop cultivation holds paramount importance for farmers [51]. In China, the cost/benefit ratio of crop cultivation has been decreasing, with the average ratio for rice, wheat, and corn dropping from 50% in 2004 to 6% in 2023 (data source: China Rural Statistical Yearbook). Given the concern of a declining cost/benefit ratio, farmers will reduce their investment in agricultural production. Farmers resort to abandoning cropland when crop cultivation becomes unprofitable [52]. Zhang et al. [53] developed a semi-empirical crop profit model that found that cropland abandonment corresponds with a decrease in the profit of planting grain by calculating planting benefits and costs and that cropland will be abandoned when the profit is 0. Wang et al. [54] further discovered that cropland abandonment occurs when factors such as labor costs elevate agricultural production expenses, diminish profits or even result in losses.

The utilization rights of cropland extend beyond mere production, as they can also be transferred [55]. In a land transfer market approaching long-term equilibrium characterized by perfect competition, farmers facing shortages in essential production factors like labor and capital can transfer excess cropland to align surplus factors and optimize profits [56]. Cropland transfer engages farmers in specialized labor divisions. Shifting cropland from less productive to more productive farmers facilitates efficient resource allocation [57]. Those who transfer cropland can earn land rent, curbing instances of cropland abandonment [58]. Farmers endowed with more significant resources who acquire cropland can efficiently utilize advanced technology to cultivate the cropland, reducing production costs through large-scale operations and enhancing profitability [59]. Many scholars regard cropland transfer as a viable solution to cropland abandonment issues [60]. However, the imperfections in China’s land transfer market impede the transfer of land in and out among farmers [61]. The Annual Report of Statistics on Rural Management in China (2006) indicated that only 5% of contracted land was transferred by Chinese farmers in 2005. Even by 2022, this rate had only risen to 37% (data source: Statistical Annual Report on Rural Policy and Reform in China (2022)). Cropland exceeding farmers’ capacities cannot be promptly transferred and is often left abandoned [62,63].

Farmers, acting as rational economic agents, prioritize profit maximization in deciding whether to abandon cropland. When cropland proves unprofitable, abandonment becomes a logical choice [53]. However, abandonment is less likely if a farmer can lease unprofitable cropland for rental income [64]. Conversely, abandonment becomes necessary when cultivating crops lacks profitability, and transferring the cropland is not feasible [65]. The introduction of agricultural subsidies enhances the cost/benefit ratio of crop cultivation, alleviating household resource constraints and motivating farmers to enhance agricultural inputs [20,29], intensifying cropland utilization and reducing abandonment. Furthermore, the improvement of resource endowment prompts farmers to expand operations, thereby increasing the demand for cropland. Currently, farmers who intend to abandon their cropland have the opportunity to transfer it to others, thereby reducing instances of cropland abandonment [66].

2.2. Potential Channels for Agricultural Subsidies to Reduce Cropland Abandonment

First, agricultural subsidies incentivize farmers to increase their agricultural production inputs, reducing cropland abandonment. Due to limited resources and credit constraints, farmers often struggle to optimize the resource endowment of cropland, prompting them to abandon some cropland for profit maximization [24]. Agricultural subsidies are distributed based on the contracted area, with payment deadlines set for completion by June 30 each year. As a clear and stable production fund, agricultural subsidies mitigate resource constraints, motivating farmers to increase their production inputs, for example, labor, machinery, and agricultural materials [20,29]. Adjustments in the composition of factor inputs can enhance the alignment of factors, improve coordination efficiency, and, ultimately, elevate the productivity of factor combinations, thereby boosting the cost/benefit ratio and diminishing cropland abandonment. Research by Goodwin and Mishra [14] indicates that heightened agricultural subsidies correlate with increased cropland utilization. Therefore, agricultural subsidies can prompt farmers to enhance cropland inputs, reducing cropland abandonment.

Second, agricultural subsidies promote cropland transfer, thereby reducing cropland abandonment. By enhancing resource endowments, agricultural subsidies incentivize farmers to expand their production scale to achieve greater profits. Numerous studies have demonstrated the effectiveness of agricultural subsidies in facilitating cropland transfer [19,47,48,63]. Farmers equipped with advanced technologies and extensive information networks can achieve economies of scale by consolidating fragmented cropland and lowering production costs, thereby increasing profitability. The rising demand for cropland creates more opportunities for households that intend to abandon cropland to transfer their use rights of cropland. As documented in previous research, this reallocation of cropland resources through cropland transfer offers an effective solution to inhibit cropland abandonment [34,64,65]. Song et al. [62] conducted a study on the impact of cropland transfer on cropland abandonment across 539 villages in 25 Chinese provinces, finding that a 1% increase in the transfer rate correlates with a 0.09% decrease in cropland abandonment. Therefore, agricultural subsidies can reduce cropland abandonment by facilitating cropland transfer.

3. Conceptual Model

According to Cui [67], we construct a conceptual model to analyze the influence of agricultural subsidies on cropland abandonment. In this model, we assume a farmer’s cropland use decision hinges on the amount of cropland to abandon prior to production to optimize maximum profits. The farmer’s cultivation profit, denoted as $\pi$, depends on the crop price, total production, marginal cost, and sunk cost. This farmer cannot determine the crop price, $p$, only a price taker [67,68]. Therefore, revenue from cultivation cropland is determined by the total production $Q$, a function of the abandonment ratio $a$, agricultural subsidies $s$, the farmer’s skill level $t$, and other factors that influence total production $\alpha$. The total cultivation cost comprises marginal cost $c$ and sunk cost $A$. $L$ denotes the farmer’s contracted cropland, and $b$ represents the ratio of cropland transferred in.

$$\underset{a}{\max }\pi =pQ\left(a,s,t,\alpha \right)-cL\left(1-a+b\right)-A$$

(1)

We assume that farmers abandon cropland sequentially based on its quality, with low-quality cropland being abandoned first, followed by high-quality cropland. Therefore, total production decreases as the abandonment ratio increases, and the rate of total production decline accelerates as more high-quality cropland is abandoned, i.e., ${\displaystyle \frac{\partial Q}{\partial a}}<0$ and ${\displaystyle \frac{{\partial }^{2}Q}{\partial a^2}}>0$. We also hypothesize that agricultural subsidies, $s$, positively influence total production, i.e., ${\displaystyle \frac{\partial Q}{\partial s}}>0$. The impact of agricultural subsidies, however, differs depending on the quality of the cropland. After low-quality cropland has been abandoned, the marginal effect of agricultural subsidies on total production increases as they are applied to higher-quality cropland, i.e., ${\displaystyle \frac{{\partial }^{2}Q}{\partial a\partial s}}>0$.

When the marginal benefits and costs of cultivating an additional cropland are equal, the farmer obtains maximum profit, i.e., $p{\displaystyle \frac{\partial Q}{\partial a}}=-cL$.

By differentiating both sides of the first-order condition with respect to agricultural subsidies, we can derive the effect of agricultural subsidies on the abandonment ratio:

$${\displaystyle \frac{da}{ds}}=-{\displaystyle \frac{\frac{{\partial }^{2}Q}{\partial a\partial s}}{\frac{{\partial }^{2}Q}{\partial a^2}}}<0$$

(2)

The result indicates that agricultural subsidies negatively influence the abandonment ratio. Farmers can only cultivate cropland if the cultivating benefits match the costs. Agricultural subsidies increase farmers’ income [19,20], which incentivizes them to reduce cropland abandonment.

4. Materials and Methods

4.1. Data Sources

The data used in this study come from the China Labor Force Dynamics Survey (CLDS) conducted by the Center for Social Science Research at Sun Yat-sen University (SSSU). The CLDS is a comprehensive dataset that spans individual, household, and village levels, providing insights into individual development, household economic status, and community development. It represents 29 provinces, municipalities, and autonomous regions in China (excluding Tibet and Hainan) through a multistage, multilevel sampling methodology that aligns with the labor force’s size. Initially conducted in 2011 solely in Guangdong Province, a dynamic tracking survey is conducted every 2 years, and so far, there are 5 periods of data in 2011, 2012, 2014, 2016, and 2018. Agricultural subsidies are commonly provided in monetary or material forms. Farmers receive all subsidies, with material subsidies converted into monetary equivalents as proxy variables for agricultural subsidies. Notably, before 2016, material subsidies were not converted into monetary equivalents in the questionnaire. Therefore, we use data from 2016 and 2018 to explore the effect of agricultural subsidies on cropland abandonment. The rural households in the sample are the subjects of our study. By removing samples with missing or irregular key variables, we obtained a sample with 11,770 farm households, which is a two-period unbalanced panel data covering 26 provinces in China for our analysis.

4.2. Variable Descriptions

4.2.1. Dependent Variable

In line with Zheng [8], we employ the cropland abandonment ratio as the dependent variable, which is the percentage of abandoned area to total cropland area, representing cropland abandonment. The cropland abandonment ratio ranges from 0% to 100%. We calculate the average cropland abandonment ratio per household in every province. Figure 1 presents the distribution of the cropland abandonment ratio in different regions. The brighter the color is, the higher the cropland abandonment ratio is. There are significant differences among various regions. The farm households in Guizhou and Guangdong have the most significant cropland abandonment ratio, accounting for 16% and 20%, respectively. In North and Northeast China, the cropland abandonment ratio is lower.

4.2.2. Explanatory Variable

Following Sha et al. [19], we use farmers’ total agricultural subsidies as the core explanatory variable, where material subsidies are converted into corresponding monetary amounts. We calculate the average agricultural subsidies per household in every province. Figure 2 shows the variation of agricultural subsidies that farm households receive in different regions. The farmers in Northeast China have the most agricultural subsidies (e.g., Heilongjiang, Jilin), followed by Central China (e.g., Henan, Hubei) and North China (e.g., Tianjin, Hebei, Shanxi, Inner Mongolia). In South China, agricultural subsidies are lower.

4.2.3. Control Variable

Cropland abandonment constitutes a choice of production for households. Our model integrates variables that can influence household production decisions as control factors, encompassing household and village characteristics [69]. Farm household characteristics encompass the dependency ratio, part-time employment, farming practices, farm machinery, and housing size. A higher dependency ratio implies reduced available labor, thereby influencing cropland abandonment. The extent of part-time employment mirrors the household’s developmental focus. For example, a higher wage/income ratio signals off-farm income as the primary revenue source, diminishing the significance of cropland. Mechanized tools can effectively supplement the labor force, curbing cropland abandonment. Investing in agricultural machinery implies that farming is an important productive household activity. Larger house sizes denote increased assets and greater capacity for agricultural investments. Village characteristics, like soil pollution, labor dynamics, agricultural labor, population shifts, water conservation, transportation conditions, production services, market access, social ties, and governance relations, also shape agricultural behavior and cropland abandonment. Soil pollution seriously affects cropland output. Village social structures significantly influence farmers’ operations, with labor dynamics, agricultural labor ratios, population migration, social ties, and governance relations profoundly shaping production behaviors and cropland abandonment. Public infrastructure conditions, including water conservation facilities, transportation conditions, production services, and market access, significantly influence farm household practices and consequently contribute to cropland abandonment. The descriptive statistical analysis of variables is depicted in

Table 1. The definition and data description of the variables.

Variables	Definition and Assignment	Mean	SD
Abandonment ratio	The ratio of abandoned area to total cropland area (%)	9.518	26.720
Agricultural subsidies	Agricultural subsidies received by households (CNY)	324.922	1437.195
Dependency ratio	Ratio of people under 14 and over 65 years old to total population in households (%)	28.269	26.778
Part-time employment	Ratio of household wage income-to-total income (%)	37.582	43.487
Farming practices	Whether using mechanized production tools to cultivate cropland: 1 = Yes, 0 = No	0.796	0.403
Farm machinery	Whether or not the household purchases all mechanized production tools: 1 = Yes, 0 = No	0.060	0.237
Housing size	Building area of housing (m2)	151.898	74.738
Soil pollution	Level of soil contamination in villages: 1 = very serious, 2 = more serious, 3 = average, 4 = not serious, 5 = no such pollution	3.896	0.586
Population shifts	Has there been a larger population movement in the village in the last year to date? 1 = Yes, 0 = No	0.003	0.053
Labor dynamics	Ratio of village outworkers-to-total village population (%)	14.723	13.984
Agricultural labor	Ratio of village resident population aged 15–64 engaged in agriculture (%)	68.244	32.164
Water conservation	Availability of water facilities in villages: 1 = Yes, 0 = No	0.614	0.487
Transportation conditions	Ratio of village transportation roads that are hard surfaced (%)	62.156	19.621
Production services	Availability of unified pest and disease control services in villages: 1 = Yes, 0 = No	0.372	0.483
Market access	Availability of marketplaces in villages: 1 = Yes, 0 = No	0.206	0.404
Social ties	Level of harmony among villagers: 1 = very low, 2 = lower, 3 = average, 4 = higher, 5 = very high	4.028	0.694
Governance relations	Level of harmony between villagers and village committee officials: 1 = very low, 2 = lower, 3 = average, 4 = higher, 5 = very high	4.055	0.707

.

4.3. Econometrics Model

This study uses a two-way fixed effects (TWFE) model to estimate the impact of agricultural subsidies on cropland abandonment. The econometric model is designed as follows:

$$Y_{it}={\beta }_0+{\beta }_1{Subsidy}_{it}+{\beta }_2{X}_{it}+{\mu }_t+{\omega }_i+{\epsilon }_{it}$$

(3)

where $Y_{it}$ is the cropland abandonment ratio of household $i$ in year $t$. ${Subsidy}_{it}$ represents the received agricultural subsidies of household $i$ in year $t$. $X_{it}$ denotes the control variables for both household and village characteristics. ${\mu }_t$ and ${\omega }_i$ are year-level and individual fixed effects. ${\epsilon }_{it}$ represents error terms. ${\beta }_0$ denotes the constant term. ${\beta }_1$ and ${\beta }_2$ are parameters to be estimated. If ${\beta }_1<0$, it suggests that agricultural subsidies can reduce cropland abandonment.

5. Results

As shown in Figure 1 and Figure 2, the cropland abandonment ratio is lower in regions with higher agricultural subsidies. From a spatial perspective, there is a negative correlation between agricultural subsidies and cropland abandonment. Nonetheless, it is still necessary to verify their relationship through empirical tests.

5.1. Benchmark Regression Results

As indicated in

Table 2. Agricultural subsidies and cropland abandonment: benchmark regression results.

Variables	(1)	(2)	(3)
Agricultural subsidies	−0.584 *** (0.131)	−0.490 *** (0.128)	−0.453 *** (0.129)
Dependency ratio		0.070 ** (0.035)	0.068 * (0.035)
Part-time employment		0.018 (0.012)	0.022 * (0.012)
Farming practices		4.035 *** (0.972)	4.135 *** (0.987)
Farm machinery		−1.344 (1.052)	−1.978 * (1.120)
Housing size		0.010 (0.007)	0.008 (0.007)
Soil pollution			−2.402 ** (1.014)
Population shifts			10.315 (7.163)
Labor dynamics			0.024 (0.029)
Agricultural labor			−0.059 *** (0.016)
Water conservation			2.893 *** (0.976)
Transportation conditions			0.099 *** (0.020)
Production services			−2.490 ** (1.015)
Market access			5.056 *** (1.288)
Social ties			2.839 *** (0.881)
Governance relations			−1.475 * (0.850)
Constant	10.352 *** (0.399)	3.016 * (1.780)	2.986 (5.677)
Year FE	Yes	Yes	Yes
Individual FE	Yes	Yes	Yes
Observations	11,770	11,770	11,770
Within-R2	0.005	0.012	0.037

Notes: *** p < 0.01, ** p < 0.05, * p < 0.1. The core explanatory variable is in log form. Robust standard errors are presented in parentheses.

, we present benchmark regression results illustrating the impact of agricultural subsidies on cropland abandonment. Column (1) does not include control variables. Column (2) introduces household characteristic variables. Column (3) incorporates variables of both household and village characteristics. The results consistently reveal that before and after integrating control variables, the coefficient of agricultural subsidies is significantly negative at the 1% level, which suggests that agricultural subsidies can reduce cropland abandonment. This finding aligns with the theoretical analysis presented in Section 2, indicating that higher levels of agricultural subsidies correspond to more effective reductions in cropland abandonment.

5.2. Robustness Test

To assess the robustness of the benchmark regression results, we use the following four strategies: (1) replacing the core explanatory variable, (2) replacing the dependent variable, (3) using balanced panel data, and (4) clustering at the village level. The results of the robust tests are presented in

Table 3. Agricultural subsidies and cropland abandonment: robustness test results.

Variables	Replacing X	Replacing Y	Balanced Panel Data	Clustering at the Village Level
	(1)	(2)	(3)	(4)
Agricultural subsidies per mu	−0.648 *** (0.180)
Agricultural subsidies		−0.056 * (0.034)	−0.453 *** (0.129)	−0.453 *** (0.141)
Control variables	Yes	Yes	Yes	Yes
Constant	3.266	1.866	2.816	2.986
	(5.686)	(1.971)	(5.674)	(8.476)
Year FE	Yes	Yes	Yes	Yes
Individual FE	Yes	Yes	Yes	Yes
Cluster at the village level				Yes
Observations	11,770	11,770	5928	11,770
Within-R2	0.038	0.019	0.037	0.037

Notes: *** p < 0.01, * p < 0.1. The agricultural subsidies variable and the agricultural subsidies per mu variable are in log form. Robust standard errors are presented in parentheses.

. Firstly, we calculate the agricultural subsidies per mu. Then, we use the agricultural subsidies per mu as the core explanatory variable to explore the relationship between agricultural subsidies and cropland abandonment. Column (1) shows that the variable of agricultural subsidies per mu significantly and negatively influences cropland abandonment at the 1% level, suggesting that higher subsidies per mu correspond to reduced cropland abandonment. Secondly, we use the area of abandoned cropland to replace the cropland abandonment ratio, which can directly capture the impact of agricultural subsidies on cropland abandonment. Column (2) presents that after redefining cropland abandonment, the estimated coefficient of the core explanatory variable is significantly negative at the 10% level, which suggests that farmers benefiting from monetary and material support will reduce abandoned cropland. Thirdly, the benchmark regression uses unbalanced panel data. If the reason that some samples do not appear in 2018 is endogenous, this leads to an unrepresentative sample. Thus, we retain only the samples present in 2016 and 2018, structure them into a balanced panel, and subsequently assess the influence of agricultural subsidies on cropland abandonment. Column (3) reveals that the coefficient of agricultural subsidies is significantly negative at the 1% level, indicating that agricultural subsidies still contribute to reducing cropland abandonment. Fourthly, standard errors are clustered at the village level to mitigate potential correlations among households within the same village that could affect parameter estimates. Column (4) shows that the coefficient of the core explanatory variable is negative and significant at the 1% level, suggesting that the inverse relationship between agricultural subsidies and cropland abandonment persists.

The above robustness tests from multiple perspectives confirm the benchmark regression results in Table 2, indicating that the agricultural subsidies can help to reduce cropland abandonment.

5.3. Endogeneity Test

While the above tests demonstrate a significantly negative impact of agricultural subsidies on cropland abandonment, potential endogeneity issues, such as measurement bias and omitted variables, may lead to biased estimates. We use instrumental variables through two-stage least squares (2SLS) to investigate possible endogeneity problems and mitigate this concern. The data we use originate from the household surveys conducted in 2016 and 2018, reflecting the agricultural production in 2015 and 2017. Referring to Zhang et al. [70], we use the provincial expenditures for agriculture, forestry, and water conservancy in the years preceding production, i.e., 2014 and 2016, as instrumental variables for agricultural subsidies. On the one hand, agricultural subsidy expenditures are an important component of provincial expenditures for agriculture, forestry, and water conservancy, which theoretically influences the agricultural subsidies received by farmers, thus meeting the correlation requirement. On the other hand, the provincial expenditures for agriculture, forestry, and water conservancy that we use are lagged, meaning they do not directly affect farmers’ cropland abandonment behavior in the current year. Furthermore, similar to Sha et al. [19], provincial expenditures for agriculture, forestry, and water conservancy operate at the macro level, making it unlikely to affect micro farmers’ decisions regarding cropland abandonment directly.

The results of the endogeneity test are documented in

Table 4. Agricultural subsidies and cropland abandonment: endogeneity test results.

Variables	(1)	(2)
Instrumental variable	2.710 *** (0.751)
Agricultural subsidies		−3.259 * (1.952)
Control variables	Yes	Yes
Year FE	Yes	Yes
Individual FE	Yes	Yes
Kleibergen–Paap rk LM statistic	12.598 ***
Kleibergen–Paap rk Wald F statistic	13.034
Observations	5928

Notes: *** p < 0.01, * p < 0.1. The agricultural subsidies variable and the provincial expenditure for agriculture, forestry, and water conservancy variable are in log form. Robust standard errors are presented in parentheses.

. The result rejects the hypothesis of under-identified instrumental variables since the p-value of the Kleibergen–Paap rk LM statistic is less than 0.001. The F-value is 13.034, exceeding 10, thereby rejecting the null hypothesis of weak instruments. The first-stage result is described in Column (1). The instrumental variable significantly and positively influences agricultural subsidies. The more provincial expenditure for agriculture, forestry, and water conservancy is, the more agricultural subsidies farmers receive. The second-stage result is presented in Column (2). The coefficient of agricultural subsidies remains significantly negative at the 10% level, suggesting that agricultural subsidies still significantly reduce cropland abandonment.

In conclusion, the above results of both robustness and endogeneity tests consistently demonstrate that agricultural subsidies can significantly and negatively affect cropland abandonment, affirming the reliability of our findings.

5.4. Mechanism Analysis

The previous empirical study’s findings reveal a significant negative impact of agricultural subsidies on cropland abandonment. Higher levels of agricultural subsidies correspond to more effective reductions in cropland abandonment. Building on the theoretical analysis in Section 2, we investigate how agricultural subsidies influence agricultural production inputs and cropland transfer, elucidating the pathways by which they influence cropland abandonment. In this section, we further explore the underlying mechanisms of agricultural subsidies reducing cropland abandonment in an empirical approach. We use the production costs of corn, rice, and wheat as metrics for agricultural production inputs, selecting these crops because they are the primary food crops in China. The cropland area transferred in by farmers is employed as a proxy for cropland transfer.

We use Equation (3) to estimate the impact of agricultural subsidies on agricultural production inputs and cropland transfer. As indicated in Column (1) in

Table 5. Agricultural subsidies and cropland abandonment: mechanism analysis results.

Variables	Agricultural Production Inputs	Cropland Transfer
	(1)	(2)
Agricultural subsidies	0.464 *** (0.021)	0.345 ** (0.145)
Control variables	Yes	Yes
Year FE	Yes	Yes
Individual FE	Yes	Yes
Observations	11,770	11,770
Within-R2	0.307	0.012

Notes: *** p < 0.01, ** p < 0.05. The agricultural subsidies variable is in log form. Robust standard errors are presented in parentheses.

, agricultural subsidies significantly enhance the agricultural production inputs at the 1% level. This effect is likely due to the stimulation provided by agricultural subsidies, prompting farmers to increase labor and material inputs. Then, increasing cropland inputs to align with the existing factor ratios maximizes profits, which reduces cropland abandonment. Moreover, improved resource endowments alleviate farmers’ agricultural production dilemmas, thereby boosting cropland utilization intensity. As Column (2) in Table 5 demonstrates, agricultural subsidies significantly facilitate cropland transfer at the 5% level. Agricultural subsidies encourage farmers to transfer in cropland, thereby expanding opportunities for farmers who intend to abandon their cropland to transfer out cropland. Between obtaining cropland rent and abandonment, farmers prioritize the former, which reduces cropland abandonment.

5.5. Heterogeneity Analysis

Our study indicates that agricultural subsidies have the potential to mitigate cropland abandonment. However, given China’s extensive territory and substantial population, significant regional and household disparities exist, leading to potential variations in the impact of agricultural subsidies on cropland abandonment. Therefore, we investigate the heterogeneous impact of agricultural subsidies on cropland abandonment across macro and micro levels.

First, China’s economic development and agricultural resource distribution vary significantly across regions. Economically, the eastern regions exhibit the highest growth rates, followed by the central and western regions. As industrialization supports agriculture, more developed economies invest more in agricultural infrastructure. Therefore, the different economic levels may influence the relationship between agricultural subsidies and cropland abandonment. Following the National Bureau of Statistics (NBS) classification of eastern, central, and western regions (https://www.stats.gov.cn/zt_18555/zthd/sjtjr/dejtjkfr/tjkp/202302/t20230216_1909741.htm#:~:text=% (accessed on 6 February 2025)), we segmented our sample to assess the diverse impacts of agricultural subsidies on cropland abandonment. Regarding agricultural resource endowment, plains offer optimal conditions for farming, particularly with agricultural mechanization. In contrast, hills and mountains exhibit limited resource endowments. These fundamental resource conditions are vital considerations for agricultural development, influencing the relationship between agricultural subsidies and cropland abandonment. Subsequently, we categorized the overall sample into three subgroups—plains, hills, and mountains—based on village topography to analyze the heterogeneous effects of agricultural subsidies on cropland abandonment.

Columns (1), (2), and (3) of

Table 6. Agricultural subsidies and cropland abandonment: heterogeneity analysis results of regions and terrains.

Variables	Region			Terrain
	East	Center	West	Plain	Hill	Mountain
	(1)	(2)	(3)	(4)	(5)	(6)
Agricultural subsidies	−0.503 *** (0.180)	−0.725 ** (0.305)	−0.165 (0.234)	−0.376 ** (0.174)	−0.923 *** (0.347)	−0.320 (0.406)
Control variables	Yes	Yes	Yes	Yes	Yes	Yes
Year FE	Yes	Yes	Yes	Yes	Yes	Yes
Individual FE	Yes	Yes	Yes	Yes	Yes	Yes
Observations	5112	3156	3502	5491	3300	2979
Within-R2	0.040	0.127	0.057	0.024	0.203	0.052

Notes: *** p < 0.01, ** p < 0.05. The agricultural subsidies variable is in log form. Robust standard errors are presented in parentheses.

present the impacts of agricultural subsidies on cropland abandonment in different regions. The estimated coefficients of agricultural subsidies on cropland abandonment in eastern and central China are significantly negative, but not in western China, which may be because the western region is the least developed and has limited capacity to invest in agricultural infrastructure compared to other regions. While agricultural subsidies can alleviate some constraints in agricultural production, they are insufficient compared to investment in agricultural infrastructure. Columns (4), (5), and (6) in Table 6 indicate that agricultural subsidies only mitigate cropland abandonment in plain and hill areas. This observation may stem from the poor agricultural resource endowment in mountainous regions, where the inhibitory effect of agricultural subsidies on cropland abandonment fails to counterbalance the influence of inadequate resource endowment. Obviously, the effectiveness of agricultural subsidies in curbing cropland abandonment depends on specific infrastructure and resource conditions. In cases where cropland is underinvested and lacks adequate endowment, agricultural subsidies struggle to dissuade farmers from abandoning cropland.

Second, rural households’ employment trends and family structures are evolving amid China’s rapid economic growth. Off-farm employment and population aging are two of the important features. Dwindling agricultural incomes are prompting farmers to explore alternative employment avenues. A prevalent practice in rural China involves farming during peak seasons and engaging in off-farm activities during slack periods. Providing agricultural subsidies boosts farm earnings, potentially influencing the production decisions of part-time households. Therefore, we examine the diverse effects of agricultural subsidies on cropland abandonment among households with varying degrees of part-time employment. We categorize the entire sample into two groups: one with a higher degree of part-time employment than the sample average and the other with a lower degree of part-time employment than the sample average. In 2022, China’s population aging had reached 14%, with the aging rate in rural areas at 18%, highlighting a more pronounced aging trend in rural regions. The household’s demographic composition is closely related to production choices. We calculate the percentage of individuals above 65 years old to the total household population, dividing those with aging rates below 7% into a low-age group and those surpassing 7% into a high-age group to assess the influence of agricultural subsidies on cropland abandonment separately.

Columns (1) and (2) in

Table 7. Agricultural subsidies and cropland abandonment: heterogeneity analysis results of off-farming and aging.

Variables	Off-Farm Work		Population Aging
	Low Degree	High Degree	Low Age	High Age
	(3)	(4)	(1)	(2)
Agricultural subsidies	−0.163 (0.177)	−1.050 *** (0.336)	−0.293 ** (0.141)	−0.674 *** (0.260)
Control variables	Yes	Yes	Yes	Yes
Year FE	Yes	Yes	Yes	Yes
Individual FE	Yes	Yes	Yes	Yes
Observations	6696	5074	6899	4871
Within-R2	0.049	0.053	0.038	0.054

Notes: *** p < 0.01, ** p < 0.05. The agricultural subsidies variable is in log form. Robust standard errors are presented in parentheses.

provide the heterogeneous estimates categorized by higher and lower degrees of part-time employment. Agricultural subsidies only exert a significant inhibitory effect on cropland abandonment in higher-degree groups. An explanation is that farmers in this group resort to off-farm employment due to meager agricultural earnings, where increased agricultural incomes from subsidies prompt part-time farmers to enhance their involvement in agricultural activities. Columns (3) and (4) in Table 7 show the effects of agricultural subsidies on cropland abandonment for different population age groups. Although the coefficients of agricultural subsidies are significantly negative in both groups, the coefficient of agricultural subsidies is more pronounced and larger in the high-age group than in the low-age group. One possible reason is the heightened financial strain within households hosting a substantial elderly population. Agricultural subsidies encourage farmers to increase agricultural production inputs by alleviating financial constraints, thereby mitigating cropland abandonment. These results indicate that agricultural subsidies remain a powerful policy tool in combating cropland abandonment amid off-farm employment and population aging trends.

6. Conclusions and Policy Implications

6.1. Conclusions

Cropland is the basis for ensuring national food security. Although China has limited cropland resources and a large population, cropland abandonment is becoming increasingly severe, squandering significant cropland resources and disrupting the ecological balance when new cropland is reclaimed. Therefore, addressing cropland abandonment is a critical concern for China’s agricultural progress, garnering attention in academic circles and governmental initiatives. While some scholars advocate for agricultural subsidies as an effective strategy to curb cropland abandonment, little research has investigated their inhibitory potential. In light of this context, we focus on China as our research subject and use the large-scale household survey data (CLDS) to study the impact of agricultural subsidies on cropland abandonment through theoretical and empirical perspectives.

The empirical results are as follows. First, agricultural subsidies demonstrate efficacy in discouraging farmers from abandoning cropland, and the result is consistently supported through robustness and endogeneity tests. Second, the mechanism analysis reveals that agricultural subsidies reduce cropland abandonment by stimulating farmers to increase agricultural production inputs and facilitate cropland transfer. Third, heterogeneous analysis suggests that the effect of agricultural subsidies on cropland abandonment varies significantly across regions, terrains, off-farm employment, and population aging. At the macro level, agricultural subsidies primarily inhibit cropland abandonment in eastern and central China, encompassing plains and hilly terrains. At the micro level, agricultural subsidies predominantly dampen cropland abandonment among households with higher degrees of part-time employment. Notably, the impact of agricultural subsidies is greater within households facing higher population aging than those with lower population aging.

6.2. Theoretical Implications

Exploring the impact of agricultural subsidies on cropland abandonment is of significant theoretical importance in the context of sustainable agricultural development. First, in development economics, cropland—the foundation of agricultural production—plays a crucial role in economic development. Agricultural subsidies can incentivize farmers’ agricultural production and enhance the positive externalities of the agricultural sector. However, most existing studies have primarily focused on the incentive effects of agricultural subsidies on agricultural production, using measures such as sown area, production inputs, production efficiency, farm income, and output levels while neglecting the response of cropland—a fundamental production factor—to the incentives of subsidies. This study addresses the gap by examining the impact of agricultural subsidies on cropland abandonment based on farmers’ decisions regarding cropland utilization, thereby extending the scope of research on agricultural subsidies and agricultural production. Second, while previous studies have viewed agricultural subsidies as an effective tool to curb cropland abandonment, there has been limited research on whether agricultural subsidies affect cropland abandonment or the theoretical foundation of their impact. We construct a theoretical model of the impact of agricultural subsidies on cropland abandonment, based on profit maximization theory, to analyze the relationship between agricultural subsidies and cropland abandonment. We then empirically test this finding and enrich the relevant literature on the factors influencing cropland abandonment.

6.3. Policy Implications

Our findings have significant policy implications. First, we observe that agricultural subsidies significantly negatively affect cropland abandonment, indicating that agricultural subsidies can be an effective tool to curb cropland abandonment. We offer empirical evidence to support the existing literature on reducing cropland abandonment through agricultural subsidies. We also provide a theoretical foundation for government agencies to develop targeted policies to inhibit cropland abandonment. Second, agricultural subsidies reduce cropland abandonment by incentivizing farmers to increase agricultural production inputs and facilitate cropland transfer. Encouraging farmers to increase agricultural production inputs and facilitating cropland transfer are pivotal strategies for addressing cropland abandonment. To increase agricultural production inputs, in addition to improving production endowments, reducing production costs by managing the escalation of agricultural material prices and service fees for agricultural machinery can help alleviate the challenges faced by household agricultural production, thereby encouraging farmers to invest in agricultural inputs. When facilitating cropland transfer, the focus should be on farmers with a high demand for cropland, as they have productive resources that can support them in transferring large quantities of cropland. The government should enhance financial support for large-scale farmers and encourage them to transfer in abandoned cropland to reduce production costs through moderate-scale cultivation, thereby minimizing the risk of cropland abandonment. Third, our heterogeneity analysis reveals that agricultural subsidies reduce cropland abandonment only in regions with better infrastructure and resource endowments. Therefore, in the eastern, western, plain, and hilly areas, agricultural subsidies can be moderately increased further to strengthen the impact of agricultural subsidies on cropland abandonment. In the western and mountainous regions, agricultural infrastructure and resource endowments should be improved so that agricultural subsidies can dampen cropland abandonment. Despite trends such as off-farm work and population aging, agricultural subsidies effectively prevent cropland abandonment. Thus, increasing agricultural subsidies in the future could further reduce cropland abandonment. Fourth, since most abandoned cropland is characterized by poor infrastructure and low fertility, maintaining its cultivation requires the government to strengthen soil quality testing to prevent the overuse of chemical fertilizers and pesticides, which can lead to soil compaction and pollution. More importantly, efforts should be made to improve the infrastructure and fertility of abandoned cropland. Fifth, abandoned cropland unsuitable for agricultural production can be repurposed for planting grasses and trees, facilitating the restoration of native vegetation. This approach helps maintain the cropland in good condition and is crucial in enhancing biodiversity and increasing carbon storage. Sixth, fully realizing the disincentive effect of agricultural subsidies on cropland abandonment requires not only efforts from the agricultural sector but also strict regulation of agricultural materials prices by market supervision authorities, increased support for large-scale farmers from the financial sector, strategic planning of agricultural infrastructure by the natural resources sector, and tailored programs by the forestry sector to restore native vegetation on cropland unsuitable for cultivation. Therefore, cross-sectoral collaboration is essential for the effective management of cropland abandonment.

6.4. Limitations

This research has several limitations. First, our estimation captures the overall impact of agricultural subsidies on production inputs. However, due to limited production data, we are unable to provide a comprehensive analysis of input adjustments related to fertilizers, pesticides, and labor. Future research should investigate the effects of agricultural subsidies on these inputs in greater detail, enabling targeted measures to maximize their positive impact on agricultural production. Second, we do not distinguish between different types of transferred cropland (e.g., abandoned versus non-abandoned) due to the lack of detailed information on cropland sources. Future studies should address this gap to assess the extent to which cropland transfers contribute to reducing abandonment.