Agricultural drone services and rural livelihoods: Evidence from China

This paper examines whether agricultural drone services improve rural livelihoods where fragmented landholdings constrain conventional mechanization amid continued labor outmigration. China provides a revealing setting because crop-protection drones are typically operated by specialized providers, making local service availability central to farmers’ access to the technology. We use a 2006–2020 county panel and a shift-share instrumental-variable design, complemented by household evidence from the China Family Panel Studies. In our preferred county-level specification, one additional active drone-service firm raises rural per capita disposable income by about RMB 336. Event-time estimates around the entry of the first drone-service firm are also positive. We find little evidence of short-run changes in county-level fertilizer intensity, conventional machinery intensity, agricultural labor, or grain output. Household evidence instead points to livelihood reorganization, with greater exposure to drone-service providers associated with higher machinery-service expenditure and farmland rental income, as well as higher wage and total household income per capita. The income response is larger in initially poorer, less-mechanized, and more rugged counties and in counties with lower cross-province inflow. Our findings suggest that service markets offer another route to agricultural modernization by expanding access to mechanization without requiring prior land consolidation or household machinery ownership.