Heterogeneity and threshold in the effect of agricultural machinery on farmers' relative poverty.

Abstract

Machinery is commonly used in the modernization of agricultural industries and is a pivotal way to eliminate poverty among farmers. However, there are still disputes regarding the effects of agricultural machinery on farmers' relative poverty. Neither the heterogeneity nor the thresholds in agricultural machinery-led poverty reduction efforts have been discussed in depth. To address those gaps, this study considers farmers' livelihood factors and resource (in)divisibility to investigate how agricultural machinery affects farmers' relative poverty as well as the heterogeneity of and thresholds in that influence. This study collected data from 1118 Chinese farming households. 2SLS-IVTobit regression results show that a 1% increase in the overall level of agricultural machinery leads to a 3.3% increase in farmers' income and a 0.523% decrease in their relative poverty. Furthermore, the three pathways of cost-saving, production efficiency, and labor allocation efficiency are identified as explaining 25.4%, 21.9%, and 21.3% of relative poverty reduction, respectively. The heterogeneity of these effects across different farming stages (i.e., plowing, sowing, and harvesting) is also examined, and the results show that plowing machinery has the largest effect. Then, a threshold analysis is conducted, which shows that farmers are influenced more when the scale of their farms surpasses the threshold of 1.12 hm2. Theoretically, this study establishes an integrated model that depicts how agricultural machinery affects farmers' relative poverty through production (in)divisibility. Practically, this study recommends additional investment in agricultural machinery (especially plowing machinery), farmland integration, and taking targeted measures to facilitate resource divisibility.