Do Farmers Gain Internet Dividends from E-commerce Adoption? Evidence from China

The revolution of information technology and communications has drastically changed the way people conduct business. With the rapid emergence of Taobao villages and other e-trading platforms in its rural areas, China is leading the developing world in rural e-commerce. Despite the potential of e-commerce to improve agriculture profits and farmer’s income, whether and to what extent farmers really benefit from it remains a question. Using household survey data from farmers selling products through e-trading platform and those selling products through traditional market channel, we aim to rigorously assess the effects of e-commerce adoption on farmer’s income and identify the key mechanisms through which the impact comes about. Propensity score matching (PSM) methods were adopted to deal with the fact that farmers’ participation in selling products through e-commerce is not random. The PSM results show that the adoption of e-commerce has a positive effect on farmers’ income, especially in the villages with more e-commerce adoption. And the increase in the profit margin and the growth of sales are the two main channels through which e-commerce impacts farmers’ income