How does rural entrepreneurial dynamism promote common prosperity for farmers and rural areas in China?

Enhancing farmers’ incomes and narrowing income disparities are essential prerequisites for achieving common prosperity. Drawing on panel data for 1564 Chinese counties from 2015 to 2023, this study incorporates farmers’ income, the urban–rural income gap, and intra-rural income inequality into a unified analytical framework. The article simultaneously studies the results of income growth and income distribution, and explores from both theoretical and empirical perspectives how rural entrepreneurship affects farmers’ well-being and promotes the common prosperity of rural China. The results yield three key findings. First, rural entrepreneurship significantly increases farmers’ incomes and reduces both the urban-rural income gap and income inequality among farmers. These effects remain robust after addressing potential endogeneity and performing a series of robustness checks. Second, rural entrepreneurship promotes income growth and advances common prosperity by facilitating adjustments in agricultural cropping structures, expanding employment opportunities for farmers, strengthening the rural collective economy, and enhancing local innovation capacity. Third, the income-enhancing effects of rural entrepreneurship are stronger in southern regions, in areas characterized by distinctive agricultural specialization, and in regions with higher levels of rural digitalization. However, these effects may be constrained by elite capture and the digital divide. Overall, the findings indicate that fostering high-quality rural entrepreneurship and supporting the endogenous growth of farmers’ incomes are critical for advancing common prosperity in rural areas.