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Crop Prices, Agricultural Revenues, and the Rural Economy 1
Author(s) -
Weber Jeremy G.,
Wall Conor,
Brown Jason,
Hertz Tom
Publication year - 2015
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1093/aepp/ppu040
Subject(s) - nonfarm payrolls , subsidy , revenue , agriculture , agricultural economics , economics , crop , population , rural economy , business , finance , market economy , geography , forestry , demography , archaeology , sociology
Abstract Policy makers in the United States often justify agricultural subsidies by stressing that agriculture is the engine of the rural economy. We use the increase in crop prices in the late 2000s to estimate the marginal effect of increased agricultural revenues on local economies in the U.S. Heartland. We find that $1 more in crop revenue generated 64¢ in personal income, with most going to farm proprietors and workers (59%) or nonfarmers who own farm assets (36%). The evidence suggests a weak link between revenues and nonfarm income or employment, or on population. Cuts to agricultural subsidies are therefore likely to have little effect on the broader rural economy in regions like the Heartland.