Can agricultural mechanization services narrow the income gap in rural China?

This paper examines the impact of agricultural mechanization services (AMS) on rural household income and income gap, utilizing the recentered influence function regression method and publicly available data collected through the China Labor-force Dynamics Survey. The results of this study shed light on various impacts of AMS. First, agricultural mechanization services can significantly increase rural household income, but there is heterogeneity in the impact on rural household income in different quantiles. The effect of income growth on medium-income and low-income groups is greater. Second, agricultural mechanization services help to narrow the income gap between rural households and alleviate income inequality in rural areas. Third, the effect of agricultural mechanization services on reducing the income gap between rural house-holds in the eastern and western regions is significantly stronger than that in the central region. Finally, further analysis based on income source structure reveals that agricultural mechanization services can significantly reduce the non-agricultural income gap of rural households, but the impact on the agricultural income gap is negligible. Our findings highlight the importance of government's efforts in promoting the development of agricultural mechanization service market in order to improve the income inequality in rural areas.