Does Farm Income Enhance Green Productivity? Evidence from China’s Rice Farming

Rui Wu and Bokyeong Park
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Rui Wu: Kyung Hee University
Bokyeong Park: Kyung Hee University

East Asian Economic Review, 2025, vol. 29, issue 4, 455-486

Abstract: This study finds that the one-period lagged income of China’s rice farmers, as measured by net profit, has a significant linear negative impact (inhibitory effect) on rice green total factor productivity (RGTFP), a relationship characterized by two separate single-threshold effects. Against the backdrop of escalating global climate shocks and prominent agricultural ecological issues, the ambiguity of this driving mechanism has constrained in-depth research on the green transition of rice farming. Based on panel data from 22 major rice-producing provinces in China from 2005 to 2022, our analysis using dynamic panel models (to account for time-lag effects) and threshold models (to identify non-linear shifts) reveals that for each unit increase in net profit, RGTFP decreases by an average of 0.14%. A one-period lagged farmer income threshold is identified at 857.4 CNY/ha; the negative impact is strongest in the low-income regime (below the threshold), but becomes an insignificant positive effect after crossing the threshold. Furthermore, a mechanization level threshold exists at 6.14 kW/ha; no significant impact is observed in the low-mechanization regime, whereas the impact of lagged farmer income on RGTFP turns significantly positive after surpassing this threshold. This research provides empirical support for policy adjustments aimed at fostering a green agricultural transition.

Keywords: Farmer Income; Rice Green Total Factor Productivity; Threshold Effect; Dynamic Panel (search for similar items in EconPapers)
JEL-codes: C24 O13 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:eaerev:021987

DOI: 10.11644/KIEP.EAER.2025.29.4.456

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