Study on the Influence Mechanism of Digitalization of Agriculture and Rural Areas on Farmers' Income Increase

Abstract

【Objective】The digitization of agriculture and rural areas is considered to be a crucial element in promoting rural revitalization and enhancing agricultural construction, significantly contributing to the increase of farmers' income. The study aims to develop an comprehensive framework for evaluating the digitization of agriculture and rural areas, empirically investigating its effectiveness in income increase and clarifying the action mechanisms. Additionally, it provides policyoriented insights to alleviate the challenges of the "digital divide" and to advance the sophisticated development of the digital economy in agricultural and rural areas.【Methods】The panel data from 31 provinces (region) in China from 2011-2020 was selected, and the Entropy-Weighted TOPSIS Method was applied for assessing the level of digitalization in agriculture and rural areas. The fixed and mediation effects were utilized to investigate the influence and mechanisms of digitalization on farmers'income increase. A threshold model was employed to explore the threshold effects between the digitalization and the increase of farmers' income.【Results】(1) Digitalization in agriculture and rural areas significantly enhances farmers' income; with a 1% increase in digitalization level corresponding to an average income increase of 57.4 CNY for farmers. The positive effect is more pronounced in the eastern regions, while it appears to be inhibitory in the central regions and less evident in promoting income in the western regions, indicating the presence of a "digital divide". (2) Digitalization in agriculture and rural areas contributes to farmers' income increase through multiple channels: fostering diversification of farmers' occupations, accelerating land circulation, enhancing the probability of farmers obtaining financing, and promoting the sales of agricultural products. (3) Digital inclusive finance exhibits significant dual threshold effects between digitalization in agriculture and rural areas and farmers' income increase, with the first threshold value at 33.401 and the second at 148.370. As the threshold interval increases, the impact of digitalization on farmers' income increase demonstrates a "positive U-shaped" relationship, showing as initially inhibitory and subsequently promotive.【Conclusion】Digitalization in agriculture and rural areas effectively facilitates income increase for farmers, however, the challenges of the "digital divide" persist. Consequently, it proposes policy implications such as enhancing digital infrastructure, providing training and education in agricultural digitalization, promoting the development of rural digital inclusive finance, and formulating region-specific digital development strategies to further augment farmers' income.

Keywords

• digitalization of agriculture and rural area
• increase of farmers' income
• entropy-weighted topsis method
• mediation effect
• threshold effect