Impact of Land Trusteeship Interest Linkage Mechanism on Farmers’ Income: Based on Contract Theory Perspective

Guoqing Liu, Shan Zheng, Kun Gao, Lianghong Yu

Farmers’ income growth is a central issue in consolidating the achievements of poverty alleviation in China and advancing common prosperity. It is also crucial for addressing the imbalance between urban and rural development and promoting agricultural and rural modernization. Based on theoretical analysis and mathematical modeling, this study develops a series of research hypotheses. A two-way fixed-effects model is employed to examine the impact of the land trusteeship interest linkage mechanism on farmers’ income growth. Furthermore, heterogeneity analyses are conducted from the perspectives of farmer characteristics, income levels, and crop types, followed by a series of robustness tests. The main findings are as follows: (1) The land trusteeship interest linkage mechanism has a significant positive effect on farmers’ income, and this conclusion remains robust after a series of robustness and endogeneity tests. Among the three core components, namely value cocreation, profit sharing, and risk division, all are found to effectively increase farmers’ income, with their marginal effects decreasing in sequence. (2) In terms of heterogeneity analysis, from the perspective of farmer types, the interest linkage mechanism has the most significant income-enhancing effect on large-scale specialized farmers, followed by small-scale full-time farmers and part-time farmers. From the perspective of income structure, the effect is mainly reflected in the increase in agricultural operating income, followed by wage income and transfer income. Regarding crop types, the income growth effect is more pronounced for vegetable producers than for wheat and maize producers. Based on these findings, efforts should focus on strengthening the interest linkage mechanism through enhanced value cocreation while implementing targeted and differentiated support measures for small-scale full-time farming households and vegetable growers. Particular attention should be paid to improving their operating income in order to maximize the income growth effects for farmers. This study provides important insights for improving mechanisms through which agricultural enterprises link with and benefit farmers, thereby contributing to the realization of China’s strategic goal of common prosperity.