Speaker: Dave Donaldson is on the faculty of the Economics Department at the Massachusetts Institute of Technology.
Abstract: In this paper we develop a new strutural approach to measuring the gains from economic integration based on a Ricardian model in which heterogeneous factors of production are allocated to multiple sectors in multiple local markets based on comparative advantage. We implement our approach using data on crop markets in approximately 1,500 U.S. counties from 1880 to 1997. Central to our empirical analysis is the use of a novel agronomic data source on predicted output by crop for small spatial units. Crucially, this dataset contains information about the productivity of all units for all crops, not just those that are actually being grown. Using this new approach we find substantial long-run gains from economic integration among US agricultural markets, of the same order of magnitude as productivity gains over that period.
Last Updated: Dec 08, 2014