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Agricultural Diversity, Structural Change and Long-run Development: Evidence from the U.S.

Martin Fiszbein

NBER Working Paper No. 23183
Issued in February 2017, Revised in June 2017
NBER Program(s):Development of the American Economy

This paper examines the role of agricultural diversity in the process of development. Using data from U.S. counties and exploiting climate-induced variation in agricultural production patterns, I show that mid-19th century agricultural diversity had positive long-run effects on population density and income per capita. Examining the effects on development outcomes over time, I find that early agricultural diversity fostered structural change during the Second Industrial Revolution. Besides stimulating industrialization, agricultural diversity boosted manufacturing diversification, patent activity, and new labor skills, as well as knowledge- and skill-intensive industries. These results are consistent with the hypothesis that diversity spurs the acquisition of new ideas and new skills because of the presence of cross-sector spillovers and complementarities.

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Document Object Identifier (DOI): 10.3386/w23183

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