Resource information
This paper uses farm panel data from
China to examine the dynamics of land transactions, machine
investments, and the demand for machine services. Recently,
China's agriculture has experienced a large expansion
of machine rentals and machine services provided by
specialized agents, which has contributed to mechanization
of agricultural production. The empirical results show that
an increase in nonagricultural wage rates leads to expansion
of self-cultivated land size. A rise in the proportion of
nonagricultural income or the migration rate also increases
the size of self-cultivated land. Interestingly, however,
relatively educated farm households decrease the size of
self-cultivated land, which suggests that relatively less
educated farmers tend to specialize in farming. The demand
for machine services has also increased if agricultural wage
and migration rate increased over time, especially among
relatively large farms. The results on crop income support
the complementarity between rented-in land and machine
services (demanded), which implies that scale economies are
arising in Chinese agriculture with mechanization and active
land rental markets.
