Market-oriented Farmland Transfer and Outsourced Machinery Services: Evidence from China

This study investigates the effect of market-oriented farmland transfer on farmers’ utilization of outsourced machinery services (OMS), using data from the China Land Economic Survey (CLES) comprising 1,286 renting-in rural households. We utilize the two-stage least square (2SLS) and seemingly unrelated regression (SUR) model to address the endogeneity issue. The results show that market-oriented farmland transfer increases farmers’ OMS adoption, intensity, and cost, and the influence is channeled by reshaping the transaction characteristics related to uncertainty, asset specificity, and transaction frequency of OMS. Further analysis reveals that technology demonstration and machinery purchase subsidies negatively moderate the relationship between market-oriented farmland transfer and OMS. Among farmers with different farm sizes and production tasks, market-oriented farmland transfer significantly increases OMS for smallholder farmers and labor-intensive production tasks.