Rural industrial integration and household income in China: Mechanisms, distributional effects, and threshold dynamics

Achieving sustained growth in rural household income is a core challenge in agricultural and rural development. This study explores whether the integration of rural industries can promote farmers' income growth, and what the mechanism of this effect is. Based on seven waves of CFPS panel data of 2326 farmers in 30 provinces of China from 2010 to 2022, this paper uses the entropy weight method to construct the inter-provincial integration index, and analyzes its income effect, transmission path and distributional significance. The results consistently confirm that integration promotes sustained income growth. The study identifies two transmission mechanisms: the reallocation of labor to off-farm employment, which diversifies household income sources; and the easing of credit constraints, which improves smallholder access to productive resources and higher value supply chain activities. The analysis of regional heterogeneity shows that income growth is significant in highly urbanized areas and non-major grain producing areas, but weakens under the constraint of the staple grain value chain. The threshold regression finds a double threshold structure, suggesting that the income growth effect strengthens only after the degree of integration exceeds the critical level of intersectoral coordination. The quantile analysis further reveals distributional asymmetry: middle and high income farmers benefit substantially, while low income farmers have limited gains due to constrained access to value-added segments. The research results indicate that rural industrial integration can promote farmers' income growth by creating local non-agricultural employment opportunities and alleviating credit constraints. However, its benefits are influenced by regional conditions, family income status, and the stage of integration. These findings provide useful references for formulating rural industrial policies that are adapted to local development conditions.