Labor Supply and Directed Technical Change: Evidence from the Termination of the Bracero Program in 1964
- American Economic Journal: Applied Economics (Forthcoming)
This paper studies the impact of labor supply on the creation of new technology, exploiting
a large exogenous shock to the U.S. agricultural labor supply caused by the
termination of the Bracero agreements between the U.S. and Mexico at the end of 1964.
Using a text-search algorithm allocating patents to crops, I show a negative labor-supply
shock induced a sharp increase in innovation in technologies related to more affected
crops. The effect is stronger for technology related to labor-intensive production tasks.
Farm-value dynamics indicate that, despite the positive technology reaction, the policy
change was undesirable for farm owners.
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