IDEAS home Printed from https://ideas.repec.org/p/ctl/louvir/2015019.html
   My bibliography  Save this paper

Reap What You Sow: Agricultural Productivity, Structural Change and Urbanization

Author

Listed:
  • Danny McGowan

    () (University of Nottingham)

  • Chrysovalantis Vasilakis

    () (Bangor University and IRES)

Abstract

This paper explores the effects of agricultural productivity shocks on structural change. We exploit the invention of hybrid corn seed as an exogenous source of variation in US agricultural productivity. The technology significantly increased land productivity in counties suited to producing corn. Using a difference-in-difference estimation strategy we show that the treatment group experienced structural change as economic activity became more concentrated in agriculture. Owing to the factor bias of the technology, agricultural labor demand increased leading labor to reallocate from manufacturing to agriculture. We also find the rate of urbanization significantly decreases in treated counties, consistent with structural change causing a decrease in living standards. The findings support recent economic theory that argues factor-biased productivity shocks in agriculture can differentially affect structural change and economic development.

Suggested Citation

  • Danny McGowan & Chrysovalantis Vasilakis, 2015. "Reap What You Sow: Agricultural Productivity, Structural Change and Urbanization," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2015019, Universit√© catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2015019
    as

    Download full text from publisher

    File URL: http://sites.uclouvain.be/econ/DP/IRES/2015019.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Richard Hornbeck, 2012. "The Enduring Impact of the American Dust Bowl: Short- and Long-Run Adjustments to Environmental Catastrophe," American Economic Review, American Economic Association, vol. 102(4), pages 1477-1507, June.
    2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    3. Rodolfo E. Manuelli & Ananth Seshadri, 2014. "Frictionless Technology Diffusion: The Case of Tractors," American Economic Review, American Economic Association, vol. 104(4), pages 1368-1391, April.
    4. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    5. Nathan Nunn & Nancy Qian, 2011. "The Potato's Contribution to Population and Urbanization: Evidence From A Historical Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 593-650.
    6. Olmstead,Alan L. & Rhode,Paul W., 2008. "Creating Abundance," Cambridge Books, Cambridge University Press, number 9780521673877.
    7. Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
    8. Paula Bustos & Bruno Caprettini & Jacopo Ponticelli, 2016. "Agricultural Productivity and Structural Transformation: Evidence from Brazil," American Economic Review, American Economic Association, vol. 106(6), pages 1320-1365, June.
    9. Arnaud Costinot & Dave Donaldson & Cory Smith, 2016. "Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 205-248.
    10. Jonathan Skinner & Douglas Staiger, 2007. "Technology Adoption from Hybrid Corn to Beta-Blockers," NBER Chapters,in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 545-570 National Bureau of Economic Research, Inc.
    11. repec:hoo:wpaper:e-92-3 is not listed on IDEAS
    12. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 441-487.
    13. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
    14. Richard Hornbeck & Pinar Keskin, 2014. "The Historically Evolving Impact of the Ogallala Aquifer: Agricultural Adaptation to Groundwater and Drought," American Economic Journal: Applied Economics, American Economic Association, vol. 6(1), pages 190-219, January.
    15. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    16. Leah Platt Boustan & Price V. Fishback & Shawn Kantor, 2010. "The Effect of Internal Migration on Local Labor Markets:American Cities during the Great Depression," Journal of Labor Economics, University of Chicago Press, vol. 28(4), pages 719-746, October.
    17. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    18. Fernandez-Cornejo, Jorge & Caswell, Margriet & Klotz-Ingram, Cassandra, 1999. "Seeds of Change: From Hybrids to Genetically Modified Crops," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 14(4), pages 1-5.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    agriculture; productivity; structural change; urbanization;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ctl:louvir:2015019. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginie LEBLANC). General contact details of provider: http://edirc.repec.org/data/iruclbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.