The Impact of Agricultural Mechanization on Urban-rural Income Gap and its Mechanism

Abstract

The income and living standard of Chinese people are surging. Despite the continuous improvement of material quality of life, the income gap between urban and rural areas is expanding, which gradually becomes one of the prominent contradictions restricting China's economic development. The existing literature generally indicates that the development of agricultural modernization has a positive impact on farmers' income. Due to the broad definition of agricultural modernization and the large regional differences in China, the mechanism of agricultural mechanization to increase farmers' income varies from region to region. This paper uses the relevant data from the National Bureau of Statistics to establish an econometric model to specifically study the impact of agricultural mechanization on the urban-rural income gap and its impact mechanism. At the same time this paper make a regional division between agricultural provinces and non-agricultural provinces studying their heterogeneity, and finally analyze how human capital affects the income gap as a threshold variable. The empirical results show that the development of agricultural mechanization is conducive to narrowing the urban-rural income gap by increasing farmers' income and there is regional heterogeneity. Compared with the central and western regions and non-agricultural provinces, the use of agricultural machinery has a more significant negative effect on the urban-rural income gap in eastern and agricultural provinces. The effect of agricultural mechanization on the urban-rural income gap is nonlinear, and human capital has a threshold effect on it.