Agricultural mechanization and rural worker mobility: Evidence from the Agricultural Machinery Purchase Subsidies programme in China

Mechanization commands considerable attention owing to its pivotal role in catalyzing agricultural modernization. However, the causal impacts on labour reallocation and underlying mechanisms at the national level remain underexplored, particularly in developing countries. We utilize household-level data from 2003 to 2013 and employ China's Agricultural Machinery Purchase Subsidies (AMPS) as a quasi-experiment to examine the causal effects of this programme on mechanization and rural worker mobility. We find that, on average, the programme significantly promoted mechanization in treated villages, and raise rural households' migrant labour day by 15 per year. The benefits are more pronounced for households heavily reliant on agriculture and young, educated males. Mechanism analysis indicates that mechanization affects worker mobility primarily by displacing agricultural labour inputs rather than expanding land scale. A cost-benefit analysis suggests that the programme's payback period ranges from 2.4 to 7.1 years. Our findings are robust across alternative measurements, balanced samples, and instrumental variable estimations.