Description:

Christopher Sims (Northwestern University):"The Origins of the Nitrogen Revolution" (joint with Matteo Ruzzante)

Abstract: Many important technologies throughout history have been spatial, in the sense that their local benefits depend on the natural endowments present in a location. This paper studies one such spatial technology -- nitrogen fertilizer -- that revolutionized agricultural practices starting in the 19th century. We leverage natural variation in level of nitrogen deficiency with the introduction of guano and nitrate fertilizers to document several patterns in the distribution of economic activity across space in England. Firstly, we find that nitrogen-deficient places were constrained in their cropping choices to disproportionately plant crops that require little nitrogen to grow. Secondly, we use a difference-in-differences design to show that these nitrogen-deficient places substantially reallocated their crop choice after fertilizer is introduced, indicating that this spatial technology drove convergence across locations. These effects are entirely concentrated in places that (i) had low productivity at baseline and (ii) are located far from major urban centers. We embed this technology into a quantitative spatial model of the English agricultural sector with realistic geography. Fertilizer raised welfare substantially, but the converging nature of the technology shock meant that it was most beneficial under conditions of low market integration.