Seminar

How Large are the Gains from Economic Integration? Theory and Evidence from U.S. Agriculture 1880-2002

Arnaud Costinot (MIT)

March 26, 2012, 17:00–18:30

Toulouse

Room Amphi S

Political Economy Seminar

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 2002. 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 that the long-run gains from economic integration among US agricultural markets have been substantial.