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

Author

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  • Rui Wu

    (Kyung Hee University)

  • Bokyeong Park

    (Kyung Hee University)

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.

Suggested Citation

  • Rui Wu & Bokyeong Park, 2025. "Does Farm Income Enhance Green Productivity? Evidence from China’s Rice Farming," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 29(4), pages 455-486, December.
  • Handle: RePEc:ris:eaerev:021987
    DOI: 10.11644/KIEP.EAER.2025.29.4.456
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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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