Institutions and Global Crop Yields

Wolfram Schlenker (Columbia University)

March 20, 2023, 11:00–12:15


Room Auditorium 4

Environment Economics Seminar


We examine the effect of a country’s economic and legal institutions on agricultural yields. We first estimate annual discontinuities in crop yields around all global land borders that have cropland within a 100km band on both sides of the border using finescale satellite readings resulting in 83million pixels for 2001-2019. We then link these annual discontinuities to a panel of institutional quality by the Fraser Institute. We find that changes in institutional quality translate into changes in the border discontinuity over the next five years: each point of the overall index, which is on a 0-10 scale, increases the discontinuity by 2.2%, highlighting that institutional reforms have the potential to close some of the crop yield gap. When we include the 24 subcategories of the index, three of them consistently come back significant: inflation, credit market regulation, and the top marginal tax rate. While changes in the index have a significant effect on mean yields, we find no effect on yield variability. When examining extensive margin responses, we find results of a similar magnitude, but with less significance and suggestive evidence that the increase in the number of cropland pixels causes deforestation.