Production-Dependent Effects of Agricultural Mechanization on Rural Income: Evidence from China

This study examines whether agricultural mechanization promotes rural income growth in China. Using provincial panel data from 2000–2023, a two-way fixed effects model and a Spatial Durbin Model (SDM) are employed to estimate the direct, conditional, and spatial effects of mechanization. The results show that the positive association between mechanization and rural income becomes statistically insignificant after controlling for agricultural production, while agricultural production remains significantly associated with rural income. Mechanization exhibits diminishing returns as production levels increase and appears to be more effective in grain-oriented agricultural systems. Spatial analysis further reveals that agricultural production generates significant spillover effects, whereas mechanization itself does not. This study contributes to the literature by distinguishing the income effect of mechanization from its production-related and spatial effects. The findings suggest that policies should focus on strengthening production capacity, improving agricultural service systems, and better aligning mechanization investment with regional production structures.