Chapter 1 uses a double-hurdle model with panel data from Malawi to investigate how fertilizer subsidies affect farmer demand for commercial fertilizer. The paper controls for potential endogeneity caused by the non-random targeting of fertilizer subsidy recipients. Results show that on average one additional kilogram of subsidized fertilizer crowds out 0.22 kilograms of commercial fertilizer, but crowding out ranges from 0.18 among the poorest farmers to 0.30 among relatively non-poor farmers. This indicates that targeting fertilizer subsidies to the rural poor is likely to maximize the contribution of the subsidy program to total fertilizer use.Chapter 2 uses three waves of panel data in Malawi to address how fertilizer subsidies affect the agricultural labor market in Malawi. This article directly estimates how the subsidy program affects agricultural labor supply, labor demand, and median community-level wage rates, none of which have been well quantified to this point. Results from this study indicate that subsidized fertilizer has a significant negative effect on the amount of off-farm agricultural labor that recipient households supply. The average participant in the subsidy program reduces the number of days of off-farm agricultural labor supplied by 9.6% across the sample. This finding indicates that subsidy recipients may move back towards own farm production. The supply-side effect of the subsidy program is small however, as the average household that acquires subsidized fertilizer only reduces off-farm labor supply by 2.5 days on average. Therefore, the reduction in labor supply from the subsidy likely has a limited effect on household income. Fertilizer subsidies do not have a significant effect on demand for hired-in labor. This result provides some evidence that the subsidy program could have off-setting effects on the demand side, as increased demand for hired-in labor caused by boosts in production could be offset by a decrease in demand for labor as the subsidy decreases fertilizer price relative to labor price. Finally, a one kilogram increase in the average amount of subsidized fertilizer acquired per household in a community boosts median off-farm wage rate by 0.2%, but an increase of one standard deviation of subsidized fertilizer per household in a community reduces wage rate by 0.1%. This finding indicates that while greater average quantities of subsidized fertilizer in a community boost wage rates, the more unevenly that the fertilizer is distributed, the less of a positive impact it has on wage rates. The increase in median wage is mainly due to contraction of agricultural labor supply. It also provides some evidence that households who do not receive subsidized fertilizer may benefit indirectly through a slight increase in agricultural wage rates. Chapter 3 uses panel data from Malawi to measure how receiving subsidized fertilizer in the current year and in previous years affects several different measures of household well-being. Our model accounts for potential endogeneity of subsidized fertilizer due to the non-random way in which it is distributed to recipients. Results indicate that receiving subsidized fertilizer in a given year raises maize and tobacco production as well as the net value of rainy-season crop production in that year. Receipt of subsidized fertilizer over the prior three seasons also has a significant positive effect on current year maize production. However, receipt of subsidized fertilizer in the prior three consecutive years has no discernable effect on the net-value of total crop production in the current year. Moreover, we find no evidence that prior or current receipt of subsidized fertilizer contributes to off-farm or total household income. Lastly, we find no significant evidence that receiving subsidized fertilizer raises farmers' livestock and durable asset wealth. Potential general equilibrium benefits resulting from the subsidy program cannot be discounted, but the direct comparison of recipient and non-recipient households indicates that enduring effects of the subsidy beyond the year of receipt apply to maize production only and not to overall household income or asset wealth.
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