Can rural collective economic development mitigate farmland abandonment in China? The roles of endogenous scale economies and exogenous financial incentives

1 Introduction

Cultivated land is a fundamental factor of agricultural production. Changes in its use not only directly affect the livelihoods of millions of rural households but also have profound implications for national food security (Lu et al., 2024; Lai et al., 2020; Bonventure et al., 2025). Estimates show that 7.0 and 6.4% of global cropland were abandoned in 1992 and 2020, respectively (Zheng et al., 2023). In China, farmland abandonment is even more serious. In 2022, the area of abandoned cultivated land reached 31.2 million hectares, of which 82.5% was suitable for reclamation, resulting in an estimated loss of 162 million tons in grain production (Wu et al., 2025). However, farmland abandonment not only causes a decline in land production capacity and inefficient land use, but also results in institutional losses such as vacant management rights (Chen et al., 2025). This phenomenon of land withdrawal also poses more severe challenges and demands on national agricultural security, particularly food security strategies (Subedi et al., 2021; Guo et al., 2023). Therefore, clarifying the underlying causes of farmland abandonment and ensuring that grain production capacity and stable food supply remain unaffected as smallholders withdraw from land management have become a crucial and indispensable link in safeguarding national agricultural security.

To address the global challenge of farmland abandonment, governments worldwide have implemented a series of targeted policies. For instance, the European Union introduced the Common Agricultural Policy (CAP) to directly subsidize farmers (Lasanta et al., 2017), the Japanese government launched a direct payment scheme to assist in the recultivation of farmland in economically lagging regions (Ito et al., 2019), and the Chinese government abolished agricultural taxes to encourage rural households to continue agricultural production (Li et al., 2024). Although financial subsidies provide certain incentives (Hou et al., 2026), the persistent outmigration of young and middle-aged rural labor has forced cultivated land into extensive management by auxiliary labor such as left-behind women and the elderly (Li et al., 2025; Zhao et al., 2026; Xu et al., 2019a). Furthermore, the high transaction costs incurred during the process of seeking partners, negotiating deals, and executing contracts have further exacerbated the market failure in agricultural land transfer (Yang, 2024). This defect has hindered the transfer of arable land to those who are willing and capable of farming, ultimately resulting in a large amount of farmland being left uncultivated.

Farmland abandonment is jointly influenced by social factors such as economic development and market proximity (Song et al., 2025; Li and Li, 2017; Bavorova et al., 2023), climatic conditions (Ustaoğlu and Collier, 2018), and the individual behaviors of rural households. On the surface, abandonment is often attributed to rural labor outmigration and declining comparative returns to agriculture, leaving many households with the perception that farming is both difficult and unprofitable (Xu et al., 2019b; Wang et al., 2023). However, this phenomenon reflects constraints embedded in production relations and the misallocation of land resources, rather than problems inherent to agricultural production itself (Chen et al., 2025). The absence of village collective services following the abolition of agricultural taxes dismantled the traditional foundation of cooperative production, exposing households to high independent production costs (Chen et al., 2023). The lack of effective intermediary organizations to facilitate cooperative production among stakeholders is a key factor contributing to the suboptimal outcomes of current agricultural policies (Ma and Zhu, 2020). Against this backdrop, the new rural collective economy alters the cost–benefit structure of farmland abandonment for individual households (Li et al., 2023), thereby aligning government objectives with farmers’ production intentions within a collective action framework that supports long-term farmland utilization.

Existing research on the role of rural collective economic development in mitigating farmland abandonment can be classified into two analytical strands: endogenous development and exogenous promotion (Galioto and Musotti, 2023; Georgios et al., 2021; Wang et al., 2025). The endogenous development perspective emphasizes the capacity of village collectives to rely on their own assets to engage in production and management, integrate land resources, and enhance land value through diversified organizational arrangements, thereby mobilizing farmers to improve the utilization efficiency of cultivated land (Luo et al., 2024; Zhang et al., 2024). For example, collective coordination models represented by “reverse leasing and subcontracting” and the “two-field system,” as well as smallholder reorganization models driven by property rights, contract, and relational governance, all involve concentrating scattered land management rights into the collective. These rights are then contracted out to large-scale farmers or agricultural enterprises through market-oriented methods, thereby effectively curbing farmland abandonment (Zhang et al., 2021). Unlike voluntary land cooperative farming practices in Europe, which are based on private property rights, China’s rural collective economic organizations serve as the statutory carriers of collective ownership. They possess the rights to contract, integrate, and distribute returns from collective land, providing them with a unique institutional advantage in addressing farmland abandonment through internal scale operations (Pan et al., 2023).

However, not all villages possess sufficient collective assets or organizational capacity to pursue such an endogenous path. Accordingly, another strand of literature examines resource-poor villages with weak collective coordination capacity, where development often depends on external inputs such as fiscal subsidies, land acquisition compensation, and agricultural credit (Gebeyehu and Bedemo, 2024; Hong et al., 2023; Li et al., 2025). Taking Europe’s CAP as an example, it primarily sustains agricultural activities in marginal areas through income compensation, such as direct subsidies and rural development funds. Its financial instruments are mainly targeted at private farmers or voluntary cooperatives, and there is no unified collective economic entity at the village level to manage them (Lasanta et al., 2017). In contrast, relying on innovative financing models such as the pledging of collective asset equity and the mortgaging of rural property rights, China enables village collectives to secure substantial credit by using organizational credit and collective assets as collateral. In particular, external financial supply models such as “agricultural shareholding loans,” “land trusts,” and “government-bank-guarantee” schemes not only resolve the financial constraints of collective development but also establish stable land management models, effectively facilitating the recultivation of farmland in remote villages across central and western China (Zhang et al., 2023; Zhang et al., 2019; Jin et al., 2025).

Simultaneously, some scholars question the practical efficacy of these pathways. First, land scale management faces inherent profitability uncertainties. Squeezed by high production costs and volatile agricultural prices, exorbitant land transfer fees can shrink profit margins, potentially triggering recurrent abandonment (Liu et al., 2019). Second, collective economic organizations still lack adequate service provision capabilities. Villages with weak coordination struggle with high principal-agent costs, an overreliance on rural elites, and rigid decision-making, failing to meet the diverse needs of modern agricultural operators (Zhang et al., 2024). Lastly, channeling capital into rural land transfers risks the loss of collective assets. Biased credit allocation tends to favor economically advantaged villages, alongside lower overall efficacy of financial incentives (Jiang and Wang, 2026). European experiences similarly indicate that without strict local oversight and entry barriers, large-scale farms exploit capital advantages to accelerate land consolidation, forcing smallholders out through cost squeezes (Guth et al., 2020).

A review of existing studies reveals that although current literature has explored the relationship between the development of the rural collective economy and the reduction of farmland abandonment, three aspects remain to be further explored. First, existing analyses of the causes of farmland abandonment mostly focus on individual farmer decision-making, market returns, and policy subsidies (Song et al., 2025; Li et al., 2025). They fail to incorporate rural collective economic development (RCED) as a key factor into the analytical framework, ignoring their pivotal role in resource integration, interest coordination, and the realization of ownership rights. Second, there is no consensus in the literature on the relationship between collective economic development and farmland abandonment. One strand of literature emphasizes its advantages in economies of scale and organizational coordination (Luo et al., 2024; Zhang et al., 2024; Zhang et al., 2021;), while another questions its insufficient service capacity and the misallocation of financial resources (Zhang et al., 2023; Zhang et al., 2019; Jin et al., 2025). Few studies have explicitly integrated these two strands to examine the structural relationship between RCED and farmland abandonment. Third, Factor allocation varies across differentiated villages, and this variation is systematically associated with the relationship between the collective economy and farmland abandonment. Exploring such heterogeneity could clarify the collective economy’s potential contribution to Pareto improvements in land allocation efficiency, yet existing studies lack this exploration (Zhang et al., 2024). To investigate these issues, this paper utilizes data from the China Labor-force Dynamics Survey (CLDS) conducted by Sun Yat-sen University. From the perspective of property rights institutions, it examines statistical associations and Conduction path linking RCED on farmland abandonment, and further explores the heterogeneous associations across villages with different endowments and the conditional associations related to financial incentives.

The possible marginal contribution of this article lies in the following: Firstly, it breaks away from the previous research that focused solely on individual farmers’ decisions or single policy subsidies, and incorporates RCED into the analysis framework for farmland abandonment management. It demonstrates the significant negative association between RCED and farmland abandonment, compensating for the deficiency in existing literature regarding the insufficient attention paid to the pivotal role of village collectives as representatives of land ownership in resource integration. It also expands the research on the association between collective property rights system reform and farmland abandonment. Secondly, it constructs a “dual analysis framework of endogenous scale economy and exogenous financial incentives” to reveal conditional pathways through which RCED is associated with lower farmland abandonment: at the endogenous level, it addresses the physical and property constraints of farmland through “agricultural land scale operation” and “service scale operation”; at the exogenous level, it identifies an association between rural financial supply and collective management outcomes. Thirdly, it analyzes the heterogeneous associations across varying modern elements such as unified irrigation and drainage, agricultural technology guidance, and planting planning, and discovers that the negative association between RCED and farmland abandonment is more pronounced in villages with unified irrigation and drainage, technology guidance coverage, and well-developed planting planning. This responds to Schultz’s theoretical proposition of transforming traditional agriculture and reveals the specific path through which the collective economy breaks the low-level equilibrium trap of traditional agriculture by introducing modern elements.

The remainder of this paper is structured as follows. Section 2 clarifies the institutional background of RECD and its theoretical connection with farmland abandonment. Section 3 introduces the research design. Section 4 reports the baseline empirical findings. Section 5 provides a comprehensive discussion and extension. Section 6 concludes the paper and offers policy recommendations.

2 Theoretical analysis and research hypothesis

2.1 The institutional background of RCED in China

Rural collective economy refers to an economic form in which members pursue shared development through cooperation. It is a form of public ownership economy with distinct Chinese characteristics, whose core lies in the collective ownership of the means of production and the enhancement of collective income through collective management or services (Jiang et al., 2023). Unlike the traditional collective economy, which emphasized the union of collective labor, the contemporary rural collective economy achieves its economic objectives primarily by collecting contracting fees from contractors or establishing unified service enterprises to provide agricultural services for its members (Wang and Wang, 2023). Under this economic form, rural collective economic organizations have emerged as the statutory entities representing collective members to exercise ownership rights over land and other assets.

However, in the course of historical evolution, rural collective economic organizations have long faced the dilemma of being entangled with villagers’ committees, characterized by the “inseparability of administration and economy” and the “integration of the village and the cooperative.” To a certain extent, this functional overlap has eroded the competitiveness of the collective economy, impairing its independence and autonomy. As grassroots mass autonomous organizations, villagers’ committees are primarily observed in connection with public affairs and social services; whereas rural collective economic organizations should inherently focus on maintaining and increasing the value of collective assets (Lan, 2024). In recent years, rural collective economic organizations have undergone shareholding cooperative reforms. Consequently, their property rights relationships have become clearer, and their economic functions are gradually being separated from party-building and grassroots autonomy functions.

In June 2024, the National People’s Congress promulgated the Rural Collective Economic Organization Law, which will come into effect on May 1, 2025. This law corporatizes rural collective economic organizations and clarifies that, unlike market legal entities such as farmers’ professional cooperatives, they cannot go bankrupt. Instead, they are special legal entities shouldering social responsibilities, such as supporting villagers’ committees in carrying out village autonomy. This special status enables them to integrate dual public and private characteristics (Han, 2023). On the one hand, they moderately adjust the structure of partial member rights, reducing the exclusivity of the traditional collective economy; on the other hand, they are associated with changes in the utilization of non-operating assets, reflecting characteristics of diversified development models and updated management arrangements.

Accordingly, this study directs its analytical focus toward the developmental trajectory of the rural collective economy. Given that the quintessential mandate of rural collective economic organizations is now delineated as collective asset management and member service provision, collective operating income emerges as the paramount dimension for gauging their endogenous growth capacity and market-oriented service proficiency. Although operating revenue may not capture all organizational complexities, it is associated with the collective economy’s resource use and scale outcomes following separation from administrative functions. Within the scope of this study, it functions as a rigorous and representative proxy for the development effectiveness of the new rural collective economy (Jiang and Wang, 2026; Gai et al., 2025).

2.2 The associational logic between RCED and farmland abandonment

First, RCED is associated with consolidating fragmented land-use rights and reducing abandonment caused by topographical constraints. As the entity responsible for land contracting, the village collective holds a natural intermediary role. Its consolidating function has legal, institutional, and social legitimacy (Pan et al., 2023). Collectives can centrally manage recovered or voluntarily returned land. Consolidated plots are transferred to agricultural producers or operators. This approach reduces the likelihood of abandonment, especially for families with limited financial resources. Through the redistribution of land plots, the RCED also provides funding for soil improvement of scattered low-quality farmland. Such measures strengthen conservation and hazard resilience, which is associated with less abandonment on marginal land (Li et al., 2021; Zhang et al., 2017).

Second, RCED is associated with improved agricultural infrastructure, compensating for underinvestment in rural public goods. Stronger collective economies enhance the capacity to mobilize infrastructure funds, improving farming convenience and efficiency through better field roads and irrigation. Collectives absorb government resource inputs and coordinate multiple local actors. This coordination is associated with stronger farmer attachment to land and willingness to farm. For tasks households cannot undertake alone, collective coordination concentrates resources effectively. Joint production arrangements enable shared machinery costs. This pattern is observed in relation to transaction costs and abandonment outcomes (García-Alvarez-Coque et al., 2021).

Third, RCED is associated with local job creation, alleviating abandonment driven by labor outmigration. Local economic conditions are associated with outmigration patterns and rural hollowing outcomes (Jia et al., 2025). Collective economies generate local employment and enterprise, linking production, processing, and e-commerce to extend rural value chains and promote integrated development. RCED may also attract migrant returnees, new farmers, and graduates. These inflows are associated with modernized production methods, better land allocation, and renewed human capital in rural areas. Based on the above analysis, this study proposes the following hypothesis:

H1: RCED is negatively associated farmland abandonment among rural households.

2.3 Endogenous scale economies mechanism: agricultural scale management

The collective ownership system endows rural collective economic development with economies of scale and organizational advantages. By consolidating fragmented land parcels, it enables mechanized operations, unified pest control, and shared agricultural infrastructure, thereby reducing per-unit production costs. Meanwhile, its dual-tier management structure lowers transaction costs in market access and policy implementation, enhancing the collective capacity to coordinate production and mobilize resources. These scale effects operate in horizontal and vertical dimensions (Fernando et al., 2025; Xie et al., 2019).

Horizontal integration is observed in relation to farm scale, land consolidation, cooperative management, and farmland resource allocation outcomes. By clarifying rights, collectives lower transaction costs of land transfer. Idle land can be transferred to family farms or large operators. These processes increase land-use intensity and improve farmland returns (Jiang et al., 2023). As property-rights reform deepens, market mechanisms facilitate resource reallocation. This links smallholders with modern agriculture. Members transferring land receive rental income and secondary dividends from value appreciation. Such incentives improve expected farming returns and operators’ willingness to cultivate. Scaled farming is thus one pathway through which RCED is associated with abandonment outcomes.

Vertical integration incorporates household farming into broader division of labor. It promotes service-based scale operations by addressing common production needs (Wei and Lu, 2024). This narrows disparities in access to specialized assets between smallholders and large producers. As providers of agricultural socialized services, RCED is associated with lower machinery adoption costs through specialization. Households can shift from labor-based farming to advanced production factors. Without altering land-use rights, collectives coordinate non-transferred farmland. This is associated with lower transfer risks while also being consistent with households’ reliance on land for livelihood security. Socialized services enhance smallholder viability and grain profitability. They enable laborers to complete tasks more effectively, reducing abandonment associated with labor shortages (Zhang, 2024). Accordingly, the following hypothesis is proposed:

H2: RCED is negatively associated with farmland abandonment through agricultural scale management.

2.4 Exogenous financial incentives mechanism: rural financial supply

New endogenous development theory suggests that internal resources constitute the foundation of collective development, while external resources provide complementary support. Although RCED are rooted in local society, sustained development also depends on their ability to convert external inputs into endogenous growth momentum. In this sense, external capital serves as an important lever for activating local development dynamics (Lowe et al., 2018). As a major source of such external capital, rural financial supply can further reinforce the role of RCED in reducing farmland abandonment.

As a supplement to local public finance, formal rural finance can support agricultural infrastructure investment, including irrigation systems and field roads, thereby improving the provision of basic rural public goods and alleviating constraints associated with agricultural asset specificity. Better financial access corresponds to fewer production constraints and greater integration of smallholders into modern agriculture, along with lower labor intensity and higher labor productivity and land allocation efficiency (Sher et al., 2023; Massaquoi et al., 2023). Rural financial supply may also strengthen the operational incentives of RCED by supporting projects such as photovoltaic development, rental of agro-processing facilities, and agritourism. These projects can expand local employment and training opportunities, broaden market channels for agricultural products, and enhance value-added and market competitiveness, thereby reducing the risk of farmland abandonment. By enabling RCED to coordinate resources more effectively and to promote the appreciation of land assets through market-oriented operations, rural financial supply can improve local resource endowments, strengthen infrastructure, and generate broader welfare gains. Financial capital is associated with leverage in agricultural production and rural development, corresponding to a lower likelihood of farmland abandonment among rural households. Accordingly, this study proposes the following hypothesis:

H3: Rural financial supply strengthens the negative relationship between RCED and farmland abandonment.

Based on the above analysis (Zhang et al., 2026), this paper constructs a theoretical analysis framework for understanding the impact of RCED on farmland abandonment, as shown in Figure 1.

3 Materials and methods

3.1 Model specification

Given that the dataset consists of discontinuous panel data from two waves, 2016 and 2018, and the degree of variation in the main variables is relatively small, this study follows the estimation strategy of Zhang et al. (2025). Therefore, time fixed effects are included in the regression, and the baseline regression model is specified as follows:

Aban d ivt = α 0 + α 1 Collec t ivt + α 2 Contro l ivt + δ i + μ t + ε ivt (1)

In Equation 1, Aband_ivt and Collect_ivt denote the farmland abandonment and RCED status of household i in village v at time t, respectively. X_ivt includes controls at the individual, household, and village levels. α₀ is the constant, δ_i captures regional fixed effects, and μ_t captures time fixed effects. The error term ε_ivt is clustered at the village level to account for cross-sectional correlation. The coefficient α₁ captures the association between RCED and farmland abandonment.

Based on the theoretical analysis, the development of the rural collective economy may introduce land and service factors into agricultural production through the economies of scale effect, alongside farmers’ farmland abandonment decisions. Therefore, agricultural scale management can be regarded as a mediating variable. The main advantage of the stepwise regression method lies in eliminating insignificant variables. The stepwise regression method not only reduces the computational load, but also avoids the interference of non-important variables on the model, thereby improving the accuracy of the model (Desboulets, 2018; Liu et al., 2026; Liu et al., 2021). The mediation effect models are specified in Equations 2, 3 as follows:(3)Where Scale_ivt represents the mediating variables, namely farmland scale management and service scale management; β₁ and γ₁ are the regression coefficients of the explanatory variable; γ₂ is the regression coefficient of the mediating variable. According to the principles of mediation effect testing, if both coefficients β₁ and γ₂ are significant, it indicates the existence of a mediation effect. The meanings of the remaining variables are consistent with those in the baseline model.

Scal e ivt = β 0 + β 1 Collec t ivt + β 2 Contro l ivt + δ i + μ t + ε ivt (2)

Aban d ivt = γ 0 + γ 1 Collec t ivt + γ 2 Scal e ivt + γ 3 Contro l ivt + δ i + μ t + ε ivt

To examine the conditional association between RCED and farmland abandonment in the presence of external financial incentives, this study introduces an interaction term between rural financial supply and RCED and specifies the moderating model in Equation 4:Where Finance_vt denotes the degree of financial support and is used to measure rural financial supply; Collect_vt × Finance_vt is the interaction term, Its coefficient φ₄ captures the moderating effect of rural financial supply on the relationship between RCED and farmland abandonment. Given that the financial supply data are available only for 2016, this moderating analysis is conducted without time fixed effects. The definitions of the remaining variables are the same as in Equation 1.

Aban d vt = α 4 + β 4 Collec t vt + γ 4 Financ e vt + φ 4 Collec t vt × Financ e ivt + λ 4 Contro l vt + μ t + ε vt (4)

3.2 Variable selection

Dependent variable: farmland abandonment. Existing studies often measure farmland abandonment as a binary outcome, that is, whether abandonment occurs. However, such a dichotomous indicator may not adequately capture variation in the extent of abandonment across households. Therefore, this study uses the farmland abandonment rate as the dependent variable, measured as the ratio of abandoned farmland area to contracted farmland area (Ma and Zhu, 2020).

Independent variable: RCED. The operation of rural collective economic organizations is a multidimensional process encompassing organizational management, economic strength, and social services. To capture the economic dimension of rural collective economic organizations, this study uses “whether the collective has operating income” and “the level of collective operating income” as core explanatory variables (Zhang et al., 2025; Jiang and Wang, 2026). This is mainly based on the following considerations: First, collective operating income differs from administrative operating funds that rely primarily on fiscal transfer payments. It directly reflects the “self-sustaining” capacity of the collective organization to coordinate resources, participate in market competition, and generate returns, making it a core indicator for measuring the degree of marketization of the new rural collective economy. Second, this economic strength constitutes the material basis for collective organizations to construct farmland infrastructure, provide agricultural socialized services, and secure external financial credit support. Finally, collective operating income is most closely linked to farmers returning home to start businesses and make agricultural production investments. It can effectively reflect the value realization of village collective operating assets and their ability to guide farmers’ production decisions. Therefore, using this indicator aims to accurately identify the actual efficacy of the collective economy in governing farmland abandonment through resource reallocation from the perspective of “hard economic power.”

Mediating variable: Agricultural scale management. Given that current agricultural scale management in China involves two pathways—one advocating the promotion of farmland transfer and concentration to advance land scale management, and the other advocating the promotion of farmers purchasing production and operational socialized services to advance service scale management—the former leans toward farmers expanding their concentrated cultivated land area, while the latter leans toward farmers outsourcing various stages of agricultural production and operation. Therefore, this paper briefly refers to them as “dual agricultural scale” management (Yin et al., 2024). Based on the research of Niu et al. (2021), we use the question “per capita cultivated land area” from the questionnaire to identify land scale management. Service scale management is identified using the question “whether to rent or borrow production tools for mechanized farming.” If a household chooses to rent or borrow production tools for mechanized farming, it is assigned a value of 1; otherwise, it is 0. This means that farmers can enjoy the economies of scale of mechanized operations without having to purchase large machinery and equipment themselves, which is exactly the core characteristic distinguishing service scale management from land scale management.

Moderating variable: Rural financial supply. To more accurately capture the supportive role of external capital in the development of the collective economy and avoid measurement errors caused by using physical branch indicators, this study draws on relevant literature to set moderating variables from two dimensions: the breadth and depth of rural financial supply. The breadth of rural financial supply is measured by the survey question, “Have you been able to successfully obtain a loan from formal financial institutions such as banks or credit unions for productive investment purposes?” If the answer is “yes,” it is assigned a value of 1; otherwise, it is 0. This indicator reflects the actual coverage of the formal financial system over farmers’ production and management activities. The depth of rural financial supply is measured by “the total amount of loans obtained by the household from formal financial institutions divided by the household size.” This indicator reflects the actual intensity of external capital injection and can demonstrate the supporting capacity of financial resources for agricultural production factor inputs (Jiang and Wang, 2026).

Control variables. Following existing literature (Ma and Zhu, 2020; Li et al., 2025), control variables are selected across three dimensions: individual respondent, household agricultural management, and village environment. First, respondent human capital directly determines farming capacity and labor supply. Gender, age, health status, migrant status, and income structure are controlled. Older or less healthy household heads are more prone to abandonment due to physical constraints. Migrant status and high non-agricultural income correspond to lower livelihood dependence on agriculture, and labor outmigration is directly linked to farmland abandonment. Second, household management characteristics capture production constraints and endowments, including land rights certification, land transfer, paddy field ratio, agricultural population ratio, and production costs. Land certification stabilizes expectations for long-term investment. Transfer area and paddy ratio indicate operational scale and land quality, respectively. The agricultural labor ratio measures labor adequacy, while production costs dictate net agricultural profits, serving as a core economic determinant. Third, village environmental characteristics capture macro constraints, controlling for the village labor force ratio, migrant population ratio, land reallocation frequency, and non-agricultural economy. Labor and migrant ratios reflect local labor dynamics and rural vitality. Land reallocation frequency measures institutional stability, where frequent adjustments deter investment. The village’s non-agricultural economy reflects local employment absorption, influencing localized labor transfer decisions. Definitions and descriptive statistics of the main variables are presented in Table 1.

Table 1. Descriptive statistics of the main variables.

^aSD = Standard deviation.

3.3 Data sources

Based on the research objectives and data availability, this study uses the 2016 and 2018 waves of the China Labor-force Dynamics Survey (CLDS), publicly released by Sun Yat-sen University in 2020. This survey is a household tracking survey that uses the village as the primary sampling unit, tracking selected households and their members biennially. However, due to factors such as population mobility, sample attrition, and rotation, not all households could be continuously observed across both waves, thus forming an unbalanced panel in this study. According to the research needs, this study merges the two waves of data based on village identifiers, matching RCED variables at the village level with farmland abandonment and individual characteristic data at the household level. After excluding urban areas, samples where the household head is under 16 years of age, and samples with missing important indicators, a final sample of 5,318 rural household observations from 231 administrative villages was obtained. Except for the moderating variables (loan status and loan amount), which were only published in the 2016 wave, all other variables are fully observed.

4 Results

4.1 Baseline regression results

Based on the above data and model specifications, Table 2 reports the baseline regression results. Columns (1) and (2) include only fixed effects, while Columns (3) and (4) further add the full set of control variables. The results show that both the presence of collective operating income and its level are statistically significant at the 10% level or higher. This evidence indicates that stronger collective economic capacity is associated with greater coordination of land resources and a lower incidence of farmland abandonment. The finding also has clear practical implications. By integrating idle resources, RCED is associated with the mobilization of underutilized assets, more efficient allocation of land and labor, and fewer adverse outcomes related to labor outmigration and population aging in cultivated land use.

Table 2. Baseline regression results.

Robust standard errors aggregated at the village level in parentheses; * and *** refer to p < 0.1, and p < 0.01.

The estimated coefficients for the control variables are largely consistent with theoretical expectations and prior empirical findings. At the household level, the respondent’s health status, the ratio of agricultural producers, and agricultural production costs are all significantly and negatively associated with farmland abandonment. This suggests that households with better health, a greater labor endowment, and higher production intensity are more likely to continue cultivation. Conversely, the ratio of paddy fields shows a significant positive association with abandonment, which may reflect the higher labor and water requirements of paddy cultivation, making it more susceptible to abandonment under conditions of labor scarcity. At the village level, the labor population ratio and the migrant population ratio are both significantly and negatively correlated with farmland abandonment. This indicates that villages with a larger available labor force and a lower rate of outmigration experience less abandonment. Finally, the presence of a village non-agricultural economy is positively associated with abandonment, suggesting that the availability of local off-farm employment opportunities may draw labor away from agriculture, thereby increasing the likelihood of land being left fallow.

4.2 Robustness tests

The following robustness tests are conducted to verify the baseline results. First, the dependent variable is replaced. Since abandoned farmland area is also an important indicator of the extent of farmland abandonment, the abandonment rate is replaced with abandoned area to test the robustness of the negative relationship between RCED and farmland abandonment, with results in columns (1) and (2) of Table 3. Second, the dependent variable—the farmland abandonment rate—is a proportion between 0 and 1, with a massive clustering of zero values for non-abandoned land, making it a typical limited dependent variable. Direct OLS regression fails to account for this clustering at 0, potentially yielding biased and inconsistent estimates. Based on latent variable assumptions, the Tobit model effectively handles limited dependent variables and better fits our data. Accounting for this distribution, we re-estimate the model using Tobit, with results in columns (3) and (4). Third, we adjust the clustering levels. To address the potential issue of autocorrelation, the standard errors of the baseline regression were re-clustered at the household and village levels, as shown in columns (5) and (6). The regressions show that RCED is significantly and negatively correlated with farmland abandonment at the 1% level, confirming strong robustness.

Table 3. Robustness tests.

Robust standard errors aggregated at the village level in parentheses; * and *** refer to p < 0.1, and p < 0.01.

4.3 Endogeneity analysis

The examination of village-level RCED and household farmland abandonment is one approach to addressing endogeneity concerns related to reverse causality, though potential bias from unobserved variables may remain. Following the previous studies (Jia et al., 2025), this study uses whether the village committee director and the village Party secretary are the same person as an instrumental variable. As leaders of village RCED, village cadres are observed in connection with collective affairs. The concurrent-holding arrangement has been found to be associated with lower coordination costs and more efficient decision-making, and previous studies have reported a positive association with RCED (Zhang et al., 2025). At the same time, this institutional arrangement shows no clear association with household farmland abandonment, consistent with the exogeneity of the instrument. Accordingly, this study constructs the instrumental variable by interacting this indicator with the leave-one-out group mean of RCED and estimates the model using two-stage least squares (2SLS). The Kleibergen–Paap LM statistics for under identification are 183.225 and 880.758, and the corresponding first-stage F statistics are 189.157 and 1052.208, indicating that the instrument is valid. In the second stage, the core explanatory variable remains statistically significant at the 5% level, consistent with the baseline results (Table 4). Therefore, Hypothesis 1 is supported.

Table 4. Endogeneity analysis.

Robust standard errors aggregated at the village level in parentheses; and * refer to p < 0.05, and p < 0.01.

4.4 Testing the endogenous economies-of-scale mechanism

The economies-of-scale effect of RCED is primarily reflected in their ability to concentrate and optimize the allocation of land and service factors, thereby providing the resource base for agricultural scale management. On the one hand, as the holder of collective land ownership, the RCED has an institutional advantage in the centralized management of idle land resources and can improve land-use efficiency through scaled operation, allowing production costs to be shared across larger operational units. On the other hand, RCED also play an intermediary role in the farmland transfer market by helping agricultural operators access machinery, technology, and service providers suited to local conditions. This is linked to greater smallholder access to agricultural socialized services, with stronger production incentives and lower farmland abandonment observed alongside both the horizontal expansion of farm size and the vertical expansion of service scale. Based on this logic, the mechanism analysis focuses on two channels: farmland scale management and service scale management.

The results of the mechanism test for farmland scale management are presented in Table 5. Columns (1) and (3) show that the estimated coefficients of RCED on farmland scale management are positive and statistically significant at the 1% level. This indicates that the development of the collective economy is associated with an increase in per capita cultivated land area. Furthermore, columns (2) and (4) show that the coefficient of farmland scale management on farmland abandonment is negative and significant, while the magnitude of the RCED coefficient is attenuated. This empirically substantiates that farmland scale management serves as a mediating channel through which RCED is associated with lower farmland abandonment. One possible explanation is that collective development increases the likelihood of local labor shifting into non-farm employment, while the reallocation of factor resources relaxes land constraints faced by agricultural operators seeking to expand farm size. This enables households with a comparative advantage in farming to become more specialized agricultural operators, use cultivated land more intensively, and face a lower risk of farmland abandonment.

Table 5. Mechanism test of farmland scale management induced by the optimization of internal factor allocation.

Robust standard errors aggregated at the village level in parentheses; and * refer to p < 0.05, and p < 0.01.

The test results for the mediating effect of service scale management are shown in Table 6. The results in columns (1) and (3) show that RCED is significantly and positively correlated with the provision of socialized services, indicating that villages with higher collective operating income generally have higher levels of service provision. The results in columns (2) and (4) show that the provision of socialized services is significantly and negatively correlated with farmland abandonment, and the estimated coefficient of RCED has decreased. This indicates that service scale management plays a mediating role in the negative association between RCED and farmland abandonment. A plausible explanation is that RCED, because of their direct access to village land resources and close ties with farm households, are better able to respond to the production constraints faced by smallholders. They can also aggregate dispersed demand for agricultural services and generate sufficient market scale to attract specialized providers, thereby reducing production costs and operational difficulty and increasing the likelihood that households continue farming. Overall, these results support Hypothesis 2.

Table 6. Mechanism test of service scale management induced by the optimization of internal factor allocation.

Robust standard errors aggregated at the village level in parentheses; *** refer to p < 0.01.

4.5 Testing the exogenous financial incentive mechanism

Rural financial supply is an important source of funding for RCED, and access to formal credit is a key channel through which collectives can ease financing constraints. However, financial exclusion often associated with agriculture means that financial institutions tend to locate away from rural areas, thereby limiting the credit accessibility of RCED. The potential of RCED to be associated with farmland abandonment thus relates not only to endogenous accumulation, but also to the extent to which external capital coincides with the alleviation of capital shortages and with institutional innovation and land management.

As illustrated in Table 7, the interaction term between RCED and rural financial supply is significantly negative, indicating a significant moderating effect. In villages with better financial resources, RCED is more effective at reducing farmland abandonment, thereby supporting Hypothesis 3. The local presence of financial institutions is associated with higher credit accessibility of RCED and may also correspond to a signaling effect, and these associations are linked to greater confidence of agricultural operators, more efficient factor allocation, and greater investment in agriculture, corresponding to a lower likelihood of farmland abandonment. It is worth noting that the estimate for the main association of rural financial supply is positive. This suggests that the credit allocation of current rural formal financial institutions tends to have a certain degree of policy orientation and a poverty-alleviation nature. It tends to flow toward villages with poorer agricultural production conditions, higher risks of abandonment, or relatively backward economies, aiming to alleviate their production dilemmas through capital injection. Therefore, a positive correlation between financial supply and the abandonment rate appears statistically, which actually reflects the response mechanism of financial resources to agricultural crises rather than financial supply causing abandonment.

Table 7. Mechanism test of the rural financial supply mechanism induced by the alleviation of external financing constraints.

Robust standard errors aggregated at the village level in parentheses; * and *** refer to p < 0.1 and p < 0.05.

4.6 Heterogeneity among different agricultural production models

From an economic perspective, farmland abandonment reflects the inefficient use of land resources under constrained development rights, where agricultural returns are insufficient to cover the opportunity costs of production factors. Within the context of Schultz’s views on agricultural modernization, this study investigates the association between the introduction of modern agricultural inputs by RCED and farmland abandonment. The analysis focuses on three dimensions: uniform irrigation and drainage, technical guidance, and planting planning.

4.6.1 Uniform irrigation and drainage

To examine the role of infrastructure conditions, this study constructs a dummy variable for village irrigation methods, assigning a value of 1 for villages with uniform irrigation and drainage and 0 otherwise. Group regressions in Table 8 show the negative association between RCED and farmland abandonment is significant only in villages with uniform irrigation and drainage. To verify this difference, we introduce an interaction term between RCED and the irrigation dummy. The results showed that the interaction coefficient is significantly negative at the 1% level, confirming significant group differences. These results suggest that the association involving collective organizations is more pronounced when modern service conditions exist. Uniform irrigation lowers water-use costs and risks, improves land infrastructure, and restores value to previously marginal or abandoned plots. Moreover, organizing unified irrigation corresponds to stronger farmer cooperation networks and collective identity, along with lower coordination costs and greater collective capacity for land integration. In contrast, villages without uniform irrigation rely on decentralized self-supply, where land fragmentation and water coordination problems persist.

Table 8. Heterogeneity analysis based on uniform irrigation and drainage.

Robust standard errors aggregated at the village level in parentheses; and * refer to p < 0.05, and p < 0.01.

4.6.2 Agricultural technical guidance

Insufficient rural human capital constrains improvements in agricultural productivity, whereas agricultural technical guidance can enhance farmers’ technical capacity and scientific knowledge, providing an important channel for human capital formation in rural areas. This study therefore uses whether the household has received agricultural technical guidance as a grouping variable to examine the role of human capital investment in the association between RCED and farmland abandonment. As shown in Table 9, among households that did not receive technical guidance, the association between RCED and farmland abandonment is not statistically significant, whereas a significant negative association is observed among those that did. To verify whether this group difference is statistically significant, a dummy variable for receiving technical guidance and its interaction term with the RCED variable are introduced into the model. The results indicate that the coefficient of the interaction term is significantly negative, confirming that the strength of the association between RCED and farmland abandonment differs significantly across groups. Agricultural technical guidance can provide farmers with greater opportunities for skill improvement and access to policy support, improve the production environment, and enhance both their capacity and willingness to engage in agricultural production.

Table 9. Heterogeneity analysis based on agricultural technical guidance.

Robust standard errors aggregated at the village level in parentheses; *** refer to p < 0.01.

4.6.3 Agricultural planting planning

Village-level planting planning is a prerequisite for more scientific farming. Farmland planning aligned with local development conditions can help break the closed, fragmented operational pattern of individual households and, by optimizing cropping cycles and spatial allocation of crops, maximize the production and income potential of farmland. This study uses whether the village provides planting planning services as a grouping variable to examine the relevance of rural planning to the collective management of farmland abandonment. The results in Table 10 show that the provision of planting planning services is associated with a stronger negative association between RCED and farmland abandonment. To verify whether this group difference is statistically significant, a dummy variable for planting planning services and its interaction term with the RCED variable are introduced into the model. The coefficient of the interaction term is significantly negative, confirming that the strength of the association between RCED and farmland abandonment differs significantly across groups. Greater attention by village collectives to agricultural production planning is therefore warranted. This study uses whether the village provides planting planning services as a grouping variable to examine the relation between rural planning and the collective management of farmland abandonment. Overall, the results are consistent with Schultz’s argument that building modern and efficient agriculture depends on the introduction of new production factors and investment in human capital, which together promote the upgrading of factor combinations and improvements in allocation efficiency.

Table 10. Heterogeneity analysis based on agricultural planting planning.

Robust standard errors aggregated at the village level in parentheses; * and *** refer to p < 0.1, and p < 0.01.

5 Discussion

Whether farmers are willing to cultivate their farmland is essentially an economic decision based on a cost–benefit analysis. Under the constraints of land ownership, if the land fails to generate surplus value for farmers, it may lead to farmland abandonment. This paper explores the link between RCED features and farmland abandonment practices, focusing on endogenous scale factors and exogenous financial contexts. The study finds that RCED, as the primary entities responsible for coordinating land resources and representing property rights transactions, play a crucial role in acquiring and integrating land resources, establishing large-scale farming models, and fostering market competitiveness, thereby serving as an effective vehicle for addressing farmland abandonment. Compared to existing research, this article makes two main contributions. First, it develops an integrated analytical framework that brings together the endogenous and exogenous pathways through which RCED may influence farmland abandonment, thereby offering a more systematic understanding of the relationship between collective development and land-use outcomes theoretically. Second, it provides empirical evidence from nationally representative survey data, overcoming the limitations of case-based inference. It further explores heterogeneity across different levels of agricultural production, thus improving the policy relevance of the findings in practice.

The research findings are consistent with previous scholars’ assertion that collective initiatives are associated with lower levels of farmland abandonment (Galioto and Musotti, 2023). Further analysis reveals that the negative association between RCED and farmland abandonment is more pronounced in villages that utilize agricultural machinery, receive technical guidance, and provide planting planning, which is consistent with existing research (Xie et al., 2025). The study also found that, in the observed relationship between RCED and farmland abandonment, moderate-scale agricultural management serves as an important intervening factor, which is significantly associated with improved efficiency of land resource allocation and enhanced agricultural production capacity. This reveals the complementary patterns of combined scale operations in agriculture and services, suggesting that a dual-scale management approach is a plausible pathway for advancing agricultural modernization (Yin et al., 2024; Zheng, 2024). Further analysis of farmland abandonment shows that rural financial supply is associated with collective economic organization involvement in land consolidation (Pan et al., 2023; Wang et al., 2025). These findings collectively suggest that RCED are a represents a relevant economic form for addressing farmland abandonment. Through comprehensive, region-wide land consolidation, they are associated with the integration of scattered land resources and individual labor into organized internal development resources, which corresponds to lower agricultural production costs and higher land productivity. This provides a favorable condition for promoting large-scale agricultural operations and reducing farmland abandonment in rural areas.

It should be noted that this article still has several limitations that warrant further exploration. First, the comparative perspective is insufficient, both internationally and domestically. As this study is situated in China’s rural collective land system, its findings are institutionally bounded. Internationally, future research should compare collective organizations across countries with different land tenure systems and stages of rural transformation, helping distinguish context-specific from transferable insights. Domestically, rural collective organizations vary substantially in development paths, participating entities, and resource endowments, likely associated with heterogeneous integration patterns. Comparative analyses of different RCED models within China are therefore needed to identify commonalities and clarify which findings are generalizable across organizational forms. Second, while this study examines the mechanisms by which RCED influence farmland abandonment from a micro-level household perspective, future research could conduct more macro-level empirical studies at the county, municipal, or provincial levels. Finally, it is necessary to investigate the impact of RCED on other aspects of land use, including crop structure, land productivity, and the degree of land intensification. A comprehensive assessment of how the development and strengthening of RCED influence land use patterns will help clarify their multifaceted roles and functional positioning in addressing farmland abandonment, thereby providing a basis for targeted policy implementation and dynamic adjustments.

6 Conclusions and policy implications

Based on the empirical analysis using two waves of CLDS data and drawing on the core propositions of new endogenous development theory, this study examines the statistical associations and conditional mechanisms between RCED and household farmland abandonment from the perspectives of endogenous economies of scale and exogenous financial incentives. Three main conclusions can be drawn.

First, the RCED is significantly and negatively associated with farmland abandonment among rural households. Both the presence of collective operating income and its level are associated with lower abandonment rates. However, this association is context-dependent and has only been observed in villages that offer unified irrigation and drainage services, technical guidance, and planting planning services. Second, from the perspective of endogenous economies of scale, agricultural scale management constitutes an important channel through which RCED is associated with lower farmland abandonment. On the one hand, RCED is associated with the functioning of the farmland transfer market and supports the expansion of scale management by different types of agricultural operators, thereby reducing abandonment associated with unclear property rights. On the other hand, RCED is linked to agricultural socialized services provision, capital-labor substitution, and farmland abandonment in the context of labor shortages. Third, from the perspective of exogenous financial incentives, rural financial supply is associated with relaxing constraints on rural collective economic organizations’ investment in specific assets, enhances the feasibility of collective action, and strengthens the negative association between RCED and farmland abandonment. In light of these conclusions, we offer the following policy recommendations.

6.1 Take various measures to strengthen collectivization and consolidate RCED outcomes

The policy should strengthen rural collective economic organizations in order to address the organizational constraints in agricultural development. Our results show that both the presence and level of collective operating income are negatively associated with household farmland abandonment. This identifies collective economic development as an organizational basis for curbing abandonment. Governments should deepen rural collective property rights reform and clarify asset ownership to enable market-oriented collective operations. Village collectives should leverage their legal status as collective land owners to integrate idle and fragmented land. Unified planning, operation, or transfer can convert these resources into productive assets.

6.2 Promote dual-scale management and activate the endogenous momentum of RCED

Agricultural scale management is a key channel linking collective development to lower abandonment, with associations operating along land scale and service scale dimensions. Collective development is associated with expanded per capita cultivated area, indicating that collectives facilitate farmland transfer markets and support scale operations by diverse agricultural operators. This is observed in relation to abandonment related to unclear property rights and fragmentation. Collective development is also associated with greater local provision of agricultural socialized services, enabling capital-labor substitution and reducing abandonment driven by labor shortages. Governments should support collectives as intermediaries to standardize land transfer markets and lower transaction costs. Farmers unwilling or unable to cultivate should be guided to transfer land to large grain producers and family farms for contiguous, efficient use. Collectives should organize specialized service providers to deliver unified plowing, pest control, and irrigation, thereby achieving scale economies without altering contract rights and addressing abandonment driven by labor or technical constraints.

6.3 Enhance the synergy of external factors and optimize the driving ability of RCED

Policy frameworks should strengthen synergy between external finance and modern inputs to enhance collective management. Rural financial supply strengthens the negative association between collective development and abandonment, indicating that external capital compensates for endogenous shortages. The inhibitory effect of collectives is significant only under modern production conditions, including unified irrigation, technical guidance, and planting planning. Financial institutions should expand rural credit and design products for collective organizations, easing constraints on infrastructure and machinery investments. Fiscal interest subsidies and risk compensation can lower collective financing costs. Support for collectives should integrate with agricultural modernization, prioritizing unified irrigation systems, farmer training, and village-level planting planning.

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Footnotes

Edited by: Mengying Feng, University of Roehampton London, United Kingdom

Reviewed by: Qiang Wu, Chongqing College of Humanities, Science and Technology, China

Haoying Li, Chinese Academy of Sciences (CAS), China