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

Citation Type: Working Paper

Publication Year: 2015

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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-indifference 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. seminar participants at the University of Louvain and the University of Warwick for helpful comments and suggestions. We are grateful to Leah Boustan for sharing data. Samuel Bottom provided excellent research assistance.

Url: https://sites.uclouvain.be/econ/DP/IRES/2015019.pdf

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Authors: Mcgowan, Danny; Vasilakis, Chrysovalantis; Pariente, William; Pascali, Luigi; Voigtlaender, Nico

Series Title: IRES Discussion Papers

Publication Number: 2015-19

Institution: University of Nottingham

Pages: 1-48

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Data Collections: IPUMS USA

Topics: Land Use/Urban Organization, Other

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