Mechanization services, farm productivity and institutional innovation in China

Purpose The purpose of this paper is to investigate the impact of mechanization services on farm productivity in Northern China from an empirical perspective, with the aim to identify the underlying market and institutional barriers. Design/methodology/approach The authors apply the regression method with the control of village fixed effects to examining the relationship between capital-labor ratio, mechanization service ratio and farm productivity, using the panel data collected in 2013 and 2015 by CCAP. Findings Mechanization services improve farm productivity through substituting labor, but it may generate a less positive impact on farms who do not have self-owned capital equipment. Originality/value It is the first study to investigate how mechanization services affect farm productivity for grain producers in Northern China.