Improving Centuries of Rural Land Misallocation: The Role of Village Merging in China

Over the past two decades, the number of natural villages in China has declined from approximately 3.5 million to about 2.3 million. Using nationwide 30-meter resolution satellite remote sensing data combined with county-level panel data for more than 2,700 counties from 2000 to 2023, this study examines the relationship between village merging and agricultural productivity growth. The results reveal a robust and positive association between the intensity of village merging and agricultural total factor productivity, and this relationship remains stable across a wide range of robustness checks. The positive effect is also observed in the context of three major policy interventions that significantly accelerated village merging: the Urban-Rural Construction Land Linkage Policy, Poverty Alleviation Relocation, and Village Merging Pilot programs. Mechanism analysis shows that village merging enhances agricultural productivity mainly by optimizing the spatial layout of agricultural facility land to support contiguous large-scale operations, promoting the specialization of agricultural producers, and improving human capital. Further heterogeneity analysis indicates that the magnitude of these effects varies across different stages of economic development, agricultural industrial structures, and geographic regions. Overall, this study provides new insights into China’s development experience in alleviating land misallocation and improving agricultural productivity in the contemporary era.