Frictionless Scale? Outsourced Services, Land Fragmentation, and Misallocation in Chinese Agriculture

Farm scale expansion in smallholder agriculture requires access to land and the capacity to organize production. Under land fragmentation, households that rent in additional land must still organize labor, machinery, timing, and management across dispersed plots. This paper examines whether outsourced agricultural services facilitate farm operational scale expansion in rural China. Using household data from the 2020 China Rural Revitalization Survey and complementary panel evidence from the National Fixed-Point Survey, this paper studies the association between service adoption and three scale-related outcomes: operated land area, number of operated plots, and net land inflow. The empirical analysis combines double/debiased machine learning with instrumental-variable checks, panel-data robustness using the National Fixed-Point Survey, and sensitivity tests for skewed land distributions and initial land endowment. Service adoption is positively associated with operated land area across DML specifications and remains robust to alternative estimators, log and winsorized outcomes, exclusions of upper-tail farms, and controls for initial land endowment. Complementary estimates suggest that service adoption is also associated with fewer operated plots and a higher probability of net land inflow. Mechanism tests using yield per mu and trust provide suggestive evidence that services relax operating constraints and improve the transaction environment. Heterogeneity analysis shows that the association varies by farm size, farmer age, agricultural income dependence, and service type, with management-oriented services showing stronger associations than basic mechanized services. The findings suggest that service markets can complement land rental markets by reducing the post-rental production and coordination costs that constrain scale formation under land fragmentation.