School of economics and management, Southwest University
effective measurement of the effect of agricultural subsidies on household income is an important issue in evaluating agricultural policies and implementing targeted poverty alleviation. This paper theoretically demonstrated the effect of agricultural subsidies on income increase and the mechanism of the impact of agricultural subsidies on farmers" income heterogeneity, and then use the data of Chinese Household Finance Survey (CHFS) in 2015 to verify the theoretical hypothesis . Based on instrumental variable quantile regression, it finds that : (1) there are differences in the impact of agricultural subsidies on the income of farmers at different income levels. Agricultural subsidy can significantly promote the increase of low-income farmers" income, but has no significant impact on the income of high-income farmers. (2) there is regional heterogeneity in the impact of agricultural subsidies on household income. Agricultural subsidies can significantly promote the increase of farmers" income in the eastern and western regions, but have no significant impact on the central region. (3) agricultural subsidies can alleviate the income inequality of farmers at different income levels. (4) agricultural subsidies alleviate the income inequality of farmers in the central and western regions, but aggravate the income inequality of farmers in the eastern and central regions. The study of this paper provides favorable theoretical and empirical support for the government to carry out precise subsidy.