The Incidence of Foreign Market Accessibility on Farmland Rental Rates
We estimate the impact of the tariffs that U.S. export crops face on farmland rental rates. The estimation of the impact of the localized measure on the rents faces two aggregation problems that lead to identification challenges: a) aggregating tariffs across trading partners to obtain crop-specific tariffs, and b) aggregating the crop-specific tariffs across crops to obtain the localized measure. Utilizing shift-share style approaches, we find that a one percent increase in the localized tariff reduces the rents by about 2.6 - 5.3% point, which implies that the 2018 Chinese retaliatory tariffs would reduce the rents by about 2%.
The authors acknowledge valuable comments from the participants in the departmental seminars of Mississippi State University and Purdue University and the NBER conference on "Agricultural Markets and Trade Policy". The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.