Measuring the Heterogeneous Effects of Input Subsidies on Household Outcomes: Evidence from MalawiDOWNLOAD
February 7, 2023 - Author: Christone J. Nyondo, Zephaniah B. Nyirenda, Maggie G. Munthali, Brian Dillon, Sergio Puerto
Countries across the south of the Sahara, including Malawi, spend vast amounts of money on agricultural subsidy programs to increase smallholder farmers’ access to inputs. Such programs give local authorities significant control over the distribution of subsidized inputs. We explore the extent to which local authorities grant access to young farmers to subsidized inputs; whether access to these inputs has an impact on productivity and income; and whether those impacts are different for younger and older farmers. Using a nine-year panel survey for Malawi, for the period 2010 to 2019, we find that despite there being no age difference between coupon recipients and non-recipients, a larger share of the non-youth within the recipients’ group received coupons for all the inputs offered in the program (i.e., the full program). Also, despite the share of these coupon recipients falling steadily over the review period, the fall is sharper for the non-youth, falling roughly 32%, from 47% in 2010 to 15% in 2019. For the youth, it falls roughly 28%, from 36.5% in 2010 to 9.0% in 2019. The fall coincides with governments’ falling allocations to the program. Lastly, we find that, despite holding smaller landholdings, access to subsidized inputs increases the relative productivity of the youth by 34%. However, it does not have any significant effect on the incomes of both the youth and the non-youth. The productivity increase in the youth is likely driven by their ability to utilize inputs more efficiently on their smaller landholdings.
Keywords: input subsidies, household outcomes, Malawi, heterogeneous effects, bias-adjusted
JEL Classifications: O12, O13, Q12, Q18]