Farming Output, Concentration, and Market Access: Evidence from the Nineteenth Century American Railroad Expansion

Abstract

I examine how market access affects farming output and whether changes to output were driven
by increasing concentration in production. To do so, I use the American railroad expansion in the late 19th century as a natural experiment. I first show that farm output increases in counties with greater market access but output concentration does not. I show that changes in farming output are driven by an expansion in land used for farming and increased rural population. Finally, I use potential yield data from FAO-GAEZ as county–crop-specific productivities to show that increased output as a result of market access shocks is not driven by crops in which a county has a comparative advantage. I conclude that, instead, the impact of market access on agricultural output comes from an increase in resources allocated to production as the rural population of counties grows and improves more farmland for use.

Keywords: comparative advantage, crops, agriculture, market access

JEL Classification: F14, N51, N71, O13