Crop Prices, Agricultural Revenues, and the Local Economy of the U.S. Heartland
Economists broadly recognize that the U.S. rural economy is no longer a farm economy, yet policy makers often justify support for agriculture by stressing the sector’s importance to the rural economy. We use the historically high crop prices in the late 2000s to estimate the marginal effect of increased agricultural revenues on local economies in the U.S. Heartland. We find that $1 in additional crop revenue generated 67 cents in local income, most of which went to farm proprietors and workers (58 percent) or nonfarmers who own farm assets (36 percent). There is no evidence of an effect on nonfarm income or employment, or on population.
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