Technology Adoption and Structural Transformation:The case of tractors in France

Résumé

Is agricultural development a prerequisite for structural transformation? In this paper I study the effect of tractor adoption on labor reallocation in France between 1970 and 2000. First, I present a theoretical model capturing adoption decisions, where improvements in tractor power play an essential role in determining the effect of technical change on labor. I then exploit exogenous geographical differences to recover unobserved tractor prices and productivities from observed choices of tractor power, which I then use to identify the structural parameters of the theoretical model. Finally, I use these estimates to quantify the effect of tractor technical change on agricultural labor. I find that tractor technical change is labor saving and thus contributed to the structural transformation process. However, quantitative results show that tractor technical change accounted for around 5% of the overall labor reallocation.