Farming Output, Concentration, and Market Access: Evidence from the Nineteenth Century American Railroad Expansion
36 Pages Posted: 28 Oct 2020
Date Written: June 10, 2020
I examine how market access affects the output of agricultural crops and whether changes to output were driven by increasing concentration in production, using the late nineteenth American transportation network expansion as a natural experiment. I use detailed potential yield data from GAEZ-FAO as county-crop specific productivities, even for crops in which no output is produced. This allows me to estimate whether output increases from market access shocks are driven by crops in which a county has a productivity advantage. I first show that while farm output increases in counties with more market access, this does not affect the number of crops produced or their concentration in output. I find that market access does not increase more for crops in which a county has higher productivity. While I do find evidence that access to counties with lower relative productivities has some positive impact on output, this effect is not economically large. I conclude, based on this and supporting evidence, that much of market access’s impact on agricultural output comes from increased allocation of resources into production and not production concentration, as counties get larger in population.
Keywords: comparative advantage, crops, agriculture, market access
JEL Classification: F14, N51, N71, O13
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