Title: Essays in Agriculture and the U.S. Economy
Description: This dissertation studies the agricultural sector in the United States. The first two chapters investigate the U.S. agricultural economy during the Great Depression, while Chapter 3 looks at the effects of air pollution on crop yields in recent years. In Chapter 1, Laurence Wilse-Samson and I examine the widespread migration to farms in the U.S. during the Great Depression. We show that the option to move to farms serves as informal insurance during times of economic crisis, and that modernization in the agricultural sector reduces the ability of the land to provide this insurance function. The movement to farms also has spillovers on the broader economy, facilitating a decline in market-based expenditure and a shift into home production. At the same time, by absorbing surplus labor, the subsistence farm sector puts upward pressure on nonfarm wages and thus provides a countervailing force against deflation. We also provide evidence that the introduction of formal unemployment compensation reduces the movement to farms later in the decade.

Our results bring attention to a less-studied effect by which formal insurance stabilizes the economy during deep crises: it increases market demand by diverting consumption away from home production and towards market-based expenditure. Chapter 2 examines the effects of the Great Depression on out-migration from farms, and how those effects vary across different groups of agriculturalists. Using complete count data from the U.S. population census, I match a sample of individuals from the 1930 census to their records in the 1940 census. Because the 1940 census includes information on location and farm status in 1935, this linked sample provides information on location and farm status for the years 1930, 1935, and 1940, allowing me to follow individuals over the course of the Great Depression. I show that farmers in mechanized agricultural regions are more likely to leave their farms during the crisis, compared to farmers in less mechanized regions, but they are no more likely to transition to the non-farm sector.

While tenant farmers are in general more likely to out-migrate compared to farm owners, this differential is even larger in the more mechanized, high-productivity areas. And while farm owners from more productive regions end up earning higher incomes than owners in less productive areas, there is no corresponding earnings premium for tenant farmers. These results suggest that the benefits from productivity-enhancing technological progress accrue to the owners of the land resources, while the costs of the farm crisis (in terms of displacement) are borne heavily by renters. Finally, I show that places with high levels of farm mortgage debt experience higher rates of out-migration, and their residents report lower subsequent income; in addition, the negative effects of mortgage debt on income are more heavily concentrated among farm owners. In Chapter 3, Wolfram Schlenker, Juha Siikamaki and I provide new empirical evidence of a possible nonlinear effect of ozone on corn yields using data for the years 1993-2011 from a comprehensive sample of the Eastern United States that accounts for 91% of U.S. corn production.

Our county-level panel analysis links observed historic corn yields to various air pollution measures constructed from fine-scaled hourly pollution monitor data. We find a statistically significant critical threshold of 72 ppb for hourly daytime ozone, considerably higher than the 40 ppb threshold derived in controlled experiments that is used as a standard in Europe. The reduction in peak ozone levels is responsible for 41% of the observed trend in average yields in 1993-2011. Our results improve the understanding of the benefits from environmental regulations and contribute to better projections of future agricultural yields and long-term commodity prices.