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

McGowan, Dannyy;Vasilakis, Chrysovalantis
(2015) , 46 pages

Files

2015019.pdf
  • Open Access
  • Adobe PDF
  • 1.03 MB
Download

Details

Authors
  • McGowan, DannyyUniversity of Nottingham
    Author
  • Vasilakis, ChrysovalantisUCLouvain
    Author
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.
Affiliations

Citations

  • APA
  • Chicago
  • FWB

McGowan, D., & Vasilakis, C. (2015). Reap What You Sow: Agricultural Productivity, Structural Change and Urbanization (IRES Discussion Papers 2015019). https://hdl.handle.net/2078.5/190661