Increasing wage, mechanization, and agriculture production in China

- This study analyzes the impact of increasing wage and mechanization in China.
- They have a negative impact on cotton, but a positive impact on grain.
- China's cotton-sown area could decrease by > 20% in three years.

As the population bonus disappeared, the wage rate has increased significantly since the early 2000s in China. Increasing wages have significantly affected export-oriented industries as well as agriculture. Mechanization is another factor affecting China's agriculture. This study shows the increasing wage and the mechanization have a negative impact on land area devoted to labor-intensive crops but a positive impact on land area devoted to labor-extensive crops. Based on nationally representative data, the empirical results conform well to the theoretical predictions.