Agricultural yields and the returns to schooling

Agricultural yields, which reflect real returns and are not contaminated by “signaling,” are another independent way to measure the returns from schooling.  Starting with Ted Schultz, this is a significant theme in development economics, and now from John Parman we have a new paper on schooling and agriculture in early 20th century America:

Formal schooling has a significant impact on modern agricultural productivity but there is little evidence quantifying the historical importance of schools in the early development of the American agricultural sector. I present new data from the Midwest at the start of the twentieth century showing that the emerging public schools were helping farmers successfully adapt to a variety of agricultural innovations. I use a unique dataset of farmers containing detailed geographical information to estimate both the private returns to schooling and human capital spillovers across neighboring farms. The results indicate that public schools contributed substantially to agricultural productivity at the turn of the century and that a large portion of this contribution came through human capital spillovers. These findings offer new insights into why the Midwest was a leader in the expansion of secondary education.

The paper is here, hat tip goes to the always excellent Kevin Lewis.  Excellent ungated slides you will find here.  One of the early slides indicates that in stable conditions “experience” outperforms education for generating agricultural productivity, but the value of education is high during times of dynamic change.


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