Trade Effects and Compliance Costs of
Food Safety Regulations: the Case of China

SONG Haiying, CHEN Kevin

Zhejiang International Studies University Faculty, Hangzhou, China
China Program Leader and Senior Research Fellow, International Food Policy Research Institute

Abstract:
Using the wealth equation approach. The results suggest that income risk affects the wealth significantly. However, the calculated average contribution of precautionary saving to the total net wealth is about 3.4%, which represents a modest contribution of precautionary savings to total net wealth comparing to the evidence of existing literature. It is particularly interesting to find that, after splitting the sample by the income source, only rural households relying on income from agriculture exhibits a significant precautionary saving motive. The other three groups (income from non-agricultural household-based business operations, off-farm investment and off-farm labor income), appear to rely on other means such as labor supply and mutual help within extended family and village, or save for specific motives other than precautionary one.

Key Words: income risk; precautionary saving; income portfolio