Reap what you sow: Agricultural technology, urbanization and structural change

• Published in: Research policy Vol. 48; no. 9; p. 103794
• Main Authors: McGowan, Danny, Vasilakis, Chrysovalantis
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01-11-2019
• Subjects: Agricultural technology; Productivity; Structural change; Urbanization; L16; Q11; Productivity; D22; D24; Urbanization; Agricultural technology; Structural change
• ISSN: 0048-7333; 1873-7625
• DOI: 10.1016/j.respol.2019.05.003

•We provide novel evidence that agricultural technologies affect urbanization and structural change.•We exploit a unique natural experiment in the United States.•Technologies which improve crop productivity increase the size of the agricultural sector, cause de-urbanization and reduce the size of non-agricultural sectors.•The results illustrate the important impact of agricultural technologies on labor demand in determining urbanization.
This paper studies how productivity-enhancing agricultural technology affects urbanization by provoking structural change. We investigate these issues using a natural experiment in the United States. The results show that technologies which improve crop productivity lead to a less urbanized economy as economic activity relocates from manufacturing and services towards agriculture. The effects are highly persistent and are driven by the technology increasing agricultural labor demand. Our findings highlight the potentially unintended, disruptive force of innovative technologies.