The Diffusion of the Automobile and Motortruck, and an Experiment in International Political Economy

Abstract

This doctoral dissertation in economics examines the diffusion of automobiles and motortrucks on American farms in the early- and mid-20th century – specifically, the impact of last-mile all-weather road access on said diffusion, and the impact of the diffusion of these technologies (and of tractors, electrification, and education) on agricultural productivity. This dissertation also examines the impact of group identity on the decisions of citizens and economic agents as they consider agreements to fully integrate capital, labor, and trade flows between a developed country and a developing country (as has occurred in the European Union). In the U.S., automobiles and motortrucks all but replaced railroads for long-distance travel, both passenger and freight. The pace of diffusion was likely powerfully influenced by access to all-weather roads and farmers were among the early adopters of automobiles and motortrucks. In developing countries today, there is tremendous growth in the sales of motor vehicles, but lack of last-mile road access slows the diffusion of motor vehicles on farms. The results from IV regressions suggest that improved all-weather road access increased usage of automobiles by 3.6% and of motortrucks by 4.2%, and that there was significant heterogeneity in the impact of road access by the types of crops and farm products produced. Automobiles, tractors, and education were found to have contributed to agricultural productivity in the U.S. during most of the years we examine, but motortrucks contributed to agricultural productivity in three years but detracted from it in four years, and electricity detracted from agricultural productivity as many years as it contributed. Automobiles, tractors, and electrification were found to be largely land-saving technologies. Tractors and electrification were largely labor-expanding, and automobiles and education were labor-saving in most of the years examined but labor-expanding in a few years. International agreements liberalizing capital, labor, and trade flows often fail to be adopted or are withdrawn from, despite overwhelming consensus by economists that they boost the national incomes of all participating nations. Understanding the impact of group identity on political decisions in favor or against economic integration is critical to understanding events such as the Brexit withdrawal and various nativist movements surging throughout the developed world. Inducing group identity was found to decrease the probability that integration is achieved. This is largely driven by what happens in the developed country, where inducing group identity decreases the probability that a majority of voters support integration by a large amount. Holding wage rates fixed, inducing group identity increases implemented tax rates in the developing country under autarky but decreases them under integration, and decreases implemented tax rates in the developed country under both scenarios. Holding wage rates and tax rates fixed, inducing group identity increases the amount of labor subjects were willing to supply. However, in none of these cases was the magnitude of the effect statistically significant.