The New Deal and the Diffusion of Tractors in the 1930s
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The New Deal and the Diffusion of Tractors in the 1930s
The New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930sNBERTodd Sorensen University of California, RiversidePlease Do Not Quote Without the Authors’ Permission.Price Fishback is the Frank and Clara Kramer Professor, Department of Economics, University of Arizona, Tucson, Arizona, 85721, phone 520-621-4421, fax 520-621-8450, and email pflshbacktffleller. The New Deal and the Diffusion of Tractors in the 1930sarizona.edu■ Todd Sorensen is Assistant Professor. Department of Economics, University of California, Riverside, CA 92521. His email Is todd.sorensen@The New Deal and the Diffusion of Tractors in the 1930s
ucr.edu. Shawn Kantor is Professor, School of Social Sciences University of California-Merced, P.O. Box 2039, Merced, CA 95344, phone 209-724-2956, faThe New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930s suggestions and the provision of data. We also appreciate comments by Sally Clarke, John Wallis, Colleen Callahan, David Mitch, Caroline Fohlin, Ann Harper Fender, participants at the DAE-NBER Summer Institute, in Cambridge, MA, July 2005and members of the Washington Area Economic History Workshop. The New Deal and the Diffusion of Tractors in the 1930s Work on this paper has been funded by National Science Foundation Grant SES 0214483. The NSF bears no responsibility for opinions expressed in this pThe New Deal and the Diffusion of Tractors in the 1930s
aper.I. IntroductionThe large-scale adoption of tractors in American agriculture might well be considered one of the most important technological trenThe New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930sthan the railroads of the late 19^ century. Between 1920 and 1960, the share of farms with tractors rose from 3.6 percent to 80 percent. White argues tltat this increase in tractor usage along with other technological improvements led to dramatic declines in the agricultural requirements for labor, The New Deal and the Diffusion of Tractors in the 1930sland, and animal stocks, freeing these resources for alternative uses in the economy.1Despite a number of highly informative studies on the diffusionThe New Deal and the Diffusion of Tractors in the 1930s
of tractors, scholars to date often could only offer Indirect assessments of the New Deal policies on the adoption of this important invention during The New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930srom 16.8 percent in 1930 to 32.4 percent In 1940. Sally Clarke (1991, 1994) suggests that the Agricultural Adjustment Administration and the Farm Credit Administration and Commodity Credit Corporation farm loan programs might well have promoted the adoption of tractors in the corn belt by reducing t The New Deal and the Diffusion of Tractors in the 1930she risk of downward fluctuations in farm market prices, improving the terms of loans, and putting more cash into the hands of farmers. Warren WhatleyThe New Deal and the Diffusion of Tractors in the 1930s
(1985, 1987) shows that the presence of share tenancy and cropping was associated with slowed adoption of tractors in the cotton South prior to 1930, The New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930sRhode (2001), White (2001, 2000), clarke (1994), and Peterson and Kislev (1986). White (2001, 495) suggests that more than 24 million work animals were replaced by the adoption of the tractor. Before 1920, nearly a quarter of all crop land in the United States was needed to produce feed to support d The New Deal and the Diffusion of Tractors in the 1930sraft animals on farms. In addition, land was needed to pasture these animals. Olmstead and Rhode (2001) suggest that this could have led to a 20 perceThe New Deal and the Diffusion of Tractors in the 1930s
nt increase in the land devoted to crop production for markets and human consumption. In addition, they estimate that the tractor was responsible for The New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930s and 1960, although Peterson and Kislev (1986) find that higher wages off the farm account for 79% of this decline, leaving only 21% to be explained by mechanization.■ : See Olmstead and Rhode (2001), clarke (1991, 1994), Alston (1981), Whatley (1985, 1987), Day (1967), Peterson and Kislev (1986), a The New Deal and the Diffusion of Tractors in the 1930snd Manuelli and Seshadri (2004), among others.2extent of tenancy between 1930 and 1960. Whatley (1983) also shows that New Deal programs were associatThe New Deal and the Diffusion of Tractors in the 1930s
ed with a reduction in tenancy during the 1930s. Thus, we might inter that the reduction ill tenancy associated with AAA payments in the south was assThe New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930si TOSS counties; therefore, scholars have had lo rely on indirect inference Io draw (heir conclusions.Recent studies of I he impact of New Deal spending on retail sales and migration al (he c ounty level, find that A AA spending (in contrast to public works and relief spending) had virtually no impa The New Deal and the Diffusion of Tractors in the 1930sct on retail sales, contributed to net out-migration, and was associated with higher infant mortality for both blacks and whites in the South. (FishhaThe New Deal and the Diffusion of Tractors in the 1930s
ck. Horrace, and Kantor 2005 and 2006; Sorensen, Fishback, Kantor and Allen 2007; and Fishback, Haines, and Kantor 2001). These findings are consistenThe New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930spers might have lost income and job opportunities through a decline in demand for (heir services. The decline in demand may have been driven by a simple fall in demand or by reorganizing the tenancy structure in ways that increased the payments to farm owners at the expense of tenants and croppers ( The New Deal and the Diffusion of Tractors in the 1930sSee Alston 1981. Holley. Winston, and Woofter. 1971; Saloutos, 1974; Mertz. 1978: Whatley, 1983: Biles. 1994. pp. 39-43). rhe AAA might also have inflThe New Deal and the Diffusion of Tractors in the 1930s
uenced adoption of tractors through its impact on farm failures. Randal Rucker and Lee Alston (1987) find that the New Deal farm loan programs and theThe New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930s failures could have increased or decreased die diffusion of tractors depending on die nature of faims saved and the alternative farm structure that would have developed in the absence of the New Deal programs and the state moratoria.Tn this paper we use data reported by the U.S. Office of Governmen The New Deal and the Diffusion of Tractors in the 1930st Reports (1940) on the distribution of New Deal funds across counties to examine directly the impact of the AAA3rental and benefit grants, the Fann CThe New Deal and the Diffusion of Tractors in the 1930s
redit Administration and Farm Security Administration loans, and public works and relief grants on the adoption of tractors between 1930 and 1940. In The New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930sactor adoption and New Deal programs, and then use instrumental variables to work to reduce endogeneity In the estimates of the impact of New Deal programs on tractor adoption. The analysis suggests that all three New Deal programs served to stimulate the adoption of tractors, although the precision The New Deal and the Diffusion of Tractors in the 1930s of the estimates is weaker for the AAA programs than for the farm loan and public works and relief programs.II. Prior Clioinetric Analysis of the NewThe New Deal and the Diffusion of Tractors in the 1930s
Deal and TractorsCHometric studies by Whatley (1983, 1985, 1987) and Clarke (1991) can be used to infer ties between the New Deal and tractor adoptioThe New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930sinimization structural models that compared the relative fixed and variable costs of farming with mules and horses and farming with tractors. They then parameterized the models after collecting substantial information on labor and land requirements, depreciation rates, wage labor costs. Interest rat The New Deal and the Diffusion of Tractors in the 1930ses, horse and mule prices, and tractor prices to develop threshold sizes at different times and in different settings. The threshold sizes were then cThe New Deal and the Diffusion of Tractors in the 1930s
ompared with the actual distribution of farms to make statements about factors influencing the adoption of tractors.The Whatley papers focus on the SoThe New Deal and the Diffusion of Tractors in the 1930sPrice Flshback University of Arizona and NBERShawn Kantor University of California Merced and N The New Deal and the Diffusion of Tractors in the 1930s as a function of the share of farms in different size categories. He chooses the threshold farm size based on the fit of the models as measured by the R-squared. For 1930 the regression with the highest R-squared of .66 (or .70) uses the share of farms larger than 259 acres; therefore, Whatley choo The New Deal and the Diffusion of Tractors in the 1930sses 260 acres as the threshold farm size. He then finds that the share of farms with tractors in the cotton South is strongly correlated with the sharThe New Deal and the Diffusion of Tractors in the 1930s
e of farms greater than 260 acres and that the share of farms above the threshold is negatively related to the extent of share tenancy4https://khothuvGọi ngay
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