Farm Mechanization on an Otherwise ‘Featureless’ Plain:
Tractors on the Northern Great Plains and Immigration
Policy of the 1920s
Byron Lew† and Bruce Cater
Department of Economics
Trent University
1600 West Bank Drive
Peterborough ON K9L 0G2
Canada
† email:
[email protected]
November 2016
Abstract
The 1920s marked the introduction of the gasoline tractor in North American agriculture. During the
same decade, immigration policies of the U.S. and Canada diverged sharply. While the U.S. implemented
immigration quotas, Canada admitted large flows of Eastern Europeans, provided their destination was
the Prairie West. With the essentially homogeneous nature of the plain on either side of the international
border, this divergence in policy set up a natural experiment that allows us to test the effects of different
changes in labor supply on the adoption of labor-saving agricultural technology. We show that, although
Canadian farmers had earlier adopted tractors at a rate that exceeded that in the U.S., the more rapid
adoption of the tractor on the U.S. Northern Great Plains following the policy divergence can be attributed
to that country’s shift to a less open immigration policy.
Keywords: immigration, technological diffusion, agriculture, North America
JEL Classification: N52, J61, O33
1
Introduction
One consequence of immigration is its effect on wages. That effect may, in turn, influence how labor-saving
technologies are adopted. Empirically establishing any link between immigration policy and capitallabor substitution, however, is problematic. In either international comparisons of countries that differ in
their immigration policies, or examinations of a single country whose immigration policy has changed
over time, other factors that influence wages and capital investment are not constant. In this paper, we
circumvent those empirical problems by exploiting a natural experiment from history to assess the effect
of changes to immigration policy on the adoption of a particular new labor-saving technology: the tractor.
Tractor diffusion was initially most rapid on the Northern Great Plains—in both the U.S. and
Canada. Within this region, agricultural conditions are essentially identical immediately north and south
of the Canada-U.S. border. Restricting our analysis to a very specific subset of counties of the states and
provinces lying contiguous to that border, allows us to effectively eliminate the impact of climatic and
geographical differences. Our analysis will first show that in the early 1920s when the diffusion of tractors
was just beginning, and when Canadian and U.S. immigration policies were similarly restrictive, tractor
adoption proceeded at essentially the same rate immediately north and south of the border.
In the latter half of the 1920s, however, a striking divergence of policies occurred—Canadian immigration policy increased the flow of unskilled agricultural labor to the Prairie provinces, while U.S.
farmers faced a labor market affected by immigration restrictions. As a consequence, tractor adoption
rates in the U.S. accelerated relative to Canada. With the essentially homogeneous nature of the plain on
either side of the international border, this divergence in policy set up a natural experiment that allows us
to test the effects of immigration policy. The border separated Canadian farmers who faced a treatment—
increased immigrant inflows—from their U.S. counterparts who faced an inelastic supply of labor. Our
analysis continues by establishing that farm wages were sensitive to the different immigration flows, with
the tightening (loosening) of the labor supply in the U.S. (Canada) resulting in rising (falling) wages.
We then show that, during the latter half of the decade, the rates of tractor adoption north and
south of the Canada-U.S. border also diverged, and the slowing rate of tractor adoption in Canada was a
direct result of changes in immigration policy. As farmers had to choose either to continue to hire labor
for the harvest season at the going wage rate, or to incur the significant cost of investing in a tractor, those
in Canada responded to the lower wages by choosing to remain dependent on seasonal harvest labor.
Their counterparts in the U.S., facing higher wages, chose instead to substitute capital for labor in farm
2
production thereby accelerating their rate of tractor adoption. These historical patterns serve to illustrate
one example of the far-reaching and unintended consequences that changes in macroeconomic policies
can generate.
2
Tractor Adoption on the Great Plains, on Both Sides of the International Border
2.1
Tractors and Labor Savings
Tractors powered by internal combustion engines were introduced at the end of the nineteenth century,
and initially the tractor was not particularly popular with farmers.1 The first impetus to diffusion was
the labor shortage of World War I. From World War I until the Great Depression, farmers in the U.S. and
Canada adopted tractors enthusiastically. In 1915 there were 25,000 tractors on farms in the U.S., by 1920
there were almost 250,000, and approximately 1 million were reported in 1930 (Carter et al., 2006, series
Da623). As tractors were initially particularly well-suited for the prairies, farmers on the Great Plains
were first to adopt. While approximately 13.5% of farms in the U.S. had adopted a tractor by 1930, on
the Northern Great Plains the adoption rate was almost three times the average with one-third of farms
reporting a tractor.2
The Great Plains were best suited to tractor adoption in this period because farms were much larger
on average.3 Scale was important as a tractor had a larger fixed cost than the technology it replaced, horses
(Sargen, 1979; Clarke, 1994; Ankli, Helsberg, and Thompson, 1980; Lew, 2000). As well, the frontier of new
settlement was prairie, and tractors were highly effective plowing unbroken grassland.
Tractors were a labor-saving technology because of their speed advantage compared to horses.
The major constraint on the amount of land that could be cropped was the time taken to harvest the
crop. Wheat is particularly sensitive to delay at harvest because the longer the ripened crop stands in the
field, the greater the risks of weather damage and of shattering—the seeds falling to the ground. This
sensitivity of the ripened wheat crop to loss made the speed associated with tractors desirable. Because a
1 They were very heavy, under-powered and had limited use in fieldwork other than plowing. They were used as a source of
power for equipment.
2 These northern Great Plains states considered are Minnesota, North Dakota, South Dakota, Montana, Nebraska and Kansas.
Nebraska and Kansas are not strictly similar to the other states as winter wheat is the principal small grain grown; whereas spring
wheat is grown from South Dakota north. Nevertheless, techniques did not differ too significantly.
3 Average farm size in 1920 was 140 acres for the entire U.S. while for the six Great Plains states average farm size was more than
double at 330 acres. Canadian Prairie farms were even modestly larger, averaging 345 acres in 1921.
3
tractor speeds up the task of harvesting, a farmer can harvest a larger area of cropland per unit time.
A farmer could potentially crop the same acreage using horses. Because of the slower speed of a
team of horses compared to a tractor, the farmer would need more teams to cover the same acreage within
the same period of time. As each team required harvest workers to stook the cut sheaves, more teams
meant more labor. So for a given farm size, a tractor’s speed of operation substituted for unskilled labor.
For example, a four-horse team pulling an 8-foot binder could cover approximately 1.6 acres/hour,
while a 3-plow tractor—the most common size on Prairie farms in the 1920s—pulling a 10-foot binder
could cover 3.2 acres/hour (Hopkins, Armstrong, and Mitchell, 1932, p.68). For a one-section Prairie farm
in the 1920s, Hopkins, Armstrong, and Mitchell (1932, p.37) estimate that operating with a tractor would
save almost half the labor needed if operated by horses only. However the big advantage of a tractor at
harvest was its ability to pull a combine. A 3-plow tractor could harvest 3.9 acres per hour and the labor
required was significantly reduced because the use of a combine eliminated the need to collect the cut
sheaves.4 The relative advantage of combine usage for labor savings was therefore even greater (Hopkins,
Armstrong, and Mitchell, 1932, p. 38, 40).
As a consequence of speeding up field operations, farmers using tractors had more time for additional work like raising livestock or providing custom work to other farmers (Martini and Silberberg,
2006). Time freed up in the field could be used profitably elsewhere. But a tractor relieved farmers of their
reliance on unskilled labor at harvest.
The amount of labor saved by adopting a tractor was scale-dependent. The threshold farm size for
tractor adoption was determined by the price of inputs for both the new technology and the technology
it was replacing. Not all farmers would necessarily benefit from adopting a tractor, and even the exact
threshold size needed for adoption was not always clear, generating an active debate among farmers and
agricultural experts at the time (Olmstead and Rhode, 1994). In explaining divergence in adoption rates
in Canada and the U.S. in the latter half of the 1920s, we focus on changes in wages, the price of the factor
tractors were saving, because over this period prices of the other inputs in the two countries were tending
to converge, and tractor technology itself was the same in both countries.
4 Combines for tractors were available either with their own engines, which made them too heavy to be pulled by horses, or were
powered by coupling to the tractor’s power takeoff.
4
2.2
Tractor Adoption Rates
Figure 1 illustrates the proportion of farms adopting tractors in the three Canadian Prairie provinces (Manitoba, Saskatchewan and Alberta) and six Great Plains states (Minnesota, North Dakota, South Dakota,
Kansas, Nebraska, and Montana). The graph illustrates how tractors have diffused over the long run.
The graph also illustrates how diffusion rates diverged from 1925 through 1940, then converged in the
post-World War II period.
[Figure 1 about here.]
In both 1920 and 1925 there are two states and two provinces leading the adopters: North Dakota,
South Dakota, Manitoba and Saskatchewan. And Alberta and Montana, while lagging the leaders as both
were relatively recently settled, also had very similar adoption rates in these two years.5 Adoption rates
on the Canadian Prairie and U.S. Northern Great Plains are essentially the same from 1920 to 1925.
By 1930, however, the diffusion of tractors among Canadian Prairie farmers was lagging their neighbors in the U.S. Adoption rates in North and South Dakota accelerated sharply past rates in Manitoba
and Saskatchewan. Montana, in particular, which looked similar to Alberta in 1920 and 1925, had caught
up with South Dakota by 1930. Even with a modest rate of increase in adoption in Alberta after 1925, by
1930 adoption rates in Alberta were the lowest of the group. Adoption rates accelerated for U.S. states
from 1925 to 1930, but barely changed for Canadian provinces.
From 1945 to 1950, adoption rates of the three Canadian Prairie provinces accelerated. By 1960, all
adoption rates had converged. From Figure 1 two patterns are evident: divergence of Canadian provinces
from U.S. states from 1925–1940, and rapid catch-up and convergence of Canadian provinces with U.S.
states after World War II. We will analyze the divergence, arguing that differences in immigration policy
affected labor supply. Labor was made relatively cheaper in Canada so farmers had less incentive to
substitute into the labor-saving technology.
We focus on the period of divergence from 1920-1930. We have illustrated the long run pattern both
to point out the significance of the divergence in adoption rates from 1925 to 1945, and to demonstrate
5 We are unable to compare countries prior to the first stocks of tractors recorded in the censuses of 1920 (U.S.) and 1921 (Canada).
The U.S. Historical Statistics reports 1,000 tractors on farms in 1910 and 5,000 in 1915 (Carter et al., 2006, series Da623). The only
Canadian source reports 3,000 on farms in Canada in 1910 and 15,000 in 1915 (Urquhart, 1993). However, we cannot believe that a
country with one-tenth the number of farms would have had three times as many tractors. And all tractors in Canada were imported
from the U.S. implying the majority of U.S. production was exported to Canada. The method used by Urquhart to construct the
Canadian stock is suspect. He works backward from the 1920 stock reported in the census and adjusts by annual imports. The
problem is the trade reports before 1918 do not record imports of tractors per se, but "engines, portable with boilers in combination,
and traction engines for farm purposes" as one category (Canada. Dominion Bureau of Statistics, 1919). Some unknown share of
these would likely have been stand-alone engines used as sources of power (Meyer, 2013).
5
that in the long-run the diffusion of the tractor on the Canadian Prairie was the same as on the U.S.
Northern Great Plain. In the postwar period, tractor adoption was in its phase of final diffusion. Unlike in
the 1920s, there remained no uncertainty among farmers. Tractors were cost-saving compared to horses.
Technological change had continued to accrue. Tractors were more powerful, allowing them to move
faster and pull larger implements, enabling a farmer to farm a larger crop acreage. Input prices has also
changed in their favor. In Canada, by 1960 the index of farm wages had increased by a factor of 3.6
relative to the mid-1920s, while the index of machinery costs had only increased by a factor of 2.7. Even
without technological change, that large a relative increase in wages would have induced tractor adoption
among all farmers. As well, Canadian tariffs on all agricultural equipment, not just tractors, were removed
in 1944. So the only real impediment to tractor adoption after World War II was inertia. Technological
change had made the tractor cost-saving for all commercial farms for the range of input prices prevailing.
We narrow our focus on a subset of the Prairie, on contiguous counties on either side of the border
as a proxy for neighboring farms, in order to reduce as much as possible confounding effects of climate
and geographic differences on techniques adopted.6 Changes in the number of tractors per farm from
1925 to 1930 for a subset of the northern plains are illustrated in Figure 2. Only the counties in U.S. states
and census divisions in Canada that are on the international border, or are immediately contiguous with
a border county or census division, are included. The sample of counties and census divisions runs from
Lake of the Woods in the East to the foothills of the Rocky Mountains in the West. The general shading
illustrates the shift in adoption from Canada to the U.S. over the second half of the 1920s.
[Figure 2 about here.]
Figure 3 illustrates the overall average adoption rates for these specific border counties and census
divisions over the long run. The 1920 U.S. Census of Agriculture reports tractor counts by state, but not by
county, so Figure 3 shows the proportion of farms with tractors by county beginning in 1925.7 Adoption
rates are almost identical among this smaller set of farms in 1925. After 1925, even for census divisions
nearest the international boundary, the delayed tractor adoption pattern is apparent. Canadian Prairie
farmers had slowed their adoption of tractors compared to farmers in the U.S. states immediately to their
6 For example, combines were adopted more rapidly in the Kansas and Nebraska because wheat dried more rapidly and uniformly
in the Southern Great Plains.
7 Tractor adoption rates by county are not reported in the 1925 U.S. Census of Agriculture. As an approximation for 1925 only,
we report instead the number of tractors adopted rather than number of farms adopting. The number of tractors adopted exceeds
the number of farms adopting tractors as some, typically larger, farms report more than one tractor. The actual number of farms
adopting tractors in the U.S. counties in 1925 will be fewer than shown in the figure. The average adoption rate for these three border
states in 1925 is 15% while the rate reported in figure 3 is 21%. The equivalent adoption rate for the three Prairie provinces in 1925
is 26%.
6
south after 1925.
[Figure 3 about here.]
If it were immigration policy differences that drove this divergence in the adoption of labor-saving
technology, we should also observe this same pattern when comparing the rest of Canada with other U.S.
states. Immigration policy changes affect the country, not just a region. As an example, we note that
adoption rates in the province of Ontario and states bordering Ontario—New York, Pennsylvania, Ohio
and Michigan—were all very similar in 1920, with Ontario ranking exactly in the middle of this group.
By 1930, however, all four states had adoption rates double that of Ontario, or greater.8 So the divergence
observed among states and provinces of the Northern Great Plains is also evident in other regions too,
consistent with our hypothesis.
2.3
Other Possible Reasons for Differences in Adoption Rates
The divergence in adoption rates between countries must have been due to diverging expectations of the
profitability of using tractors by Canadian and U.S. farmers. We hypothesize that the one difference was
immigration policy through its effect on labor cost. A tractor is a durable good whose profitability for a
farmer depends on the purchase price, the interest rate, and expectations of the price of inputs—gasoline.
The cost of the old technology, horses, was mostly the labor input and a share of output used as feed. Any
policy differences between the U.S. and Canada that influenced any subset of these factors could have
yielded the divergent pattern in tractor adoption between the two countries.
We hypothesize that the only significant change in policy between the two countries whose timing
matches the pattern of tractor adoption, and whose effects would yield the changes observed, is the
divergence in immigration policy. Wylie (1989) and Keay (2000) point to the difference in wage rates
between Canada and the U.S. in inducing different biases in technological change in Canadian industry
during this period. They specifically identify immigration policy differences between the U.S. and Canada
as responsible for differences in wage rates in the two countries.
Before addressing the impact of immigration, we will first review the other factors that were important to the decision of a farmer in choosing a tractor over retaining horses. While tractors operate on
gasoline, the relative cost of gasoline in the total cost of using tractors is very small. It is the financing
8 There is no observation for Ontario in 1925 as the Canadian Census of Agriculture in 1926 only applied to the three Prairie
provinces.
7
of the tractor, or the opportunity cost of the large investment the tractor represented, that is the major
burden. The pattern of initial rapid adoption by Canadian farmers in the early 1920s followed by lagging
adoption in the later 1920s could have been due to changes in the relative purchase price of tractors, productivity of models available in Canada and the U.S., or interest rate changes. We address each of these
three possibilities.
One policy difference between Canada and the United States that could have differentially impacted
prices of technology was commercial policy. Tariffs in Canada on imported agricultural machinery were
high, averaging almost 20% before World War I; and Canada imported much of its agricultural machinery,
and all of its tractors in this period. However tractors valued under $1400 were tariff-free beginning in
1918.9 As well, tariff rates on agricultural equipment were generally declining through this period, with
the largest declines in tariff rates occurring in 1924.10 Because farm equipment in Canada other than
tractors was more expensive due to the tariff, Canadian farmers likely substituted labor, land and horses
for machinery capital (Norrie, 1974). But while the average price of farm equipment was undoubtedly
higher in Canada, the difference was shrinking over the period (Canada, 1969). The decline in average
tariffs, particularly the large reductions in 1924, should have induced a more rapid adoption of technology,
including tractors, by Canadian farmers if demand for machinery was complementary to demand for
tractors. Tariff changes move in the wrong direction, so that cannot account for the pattern of lagging
adoption of tractors by Canadian farmers in the second half of the 1920s.
Despite changes in tariffs, it is possible that agricultural equipment was more expensive in Canada.
Canada was a small market compared to the U.S. and agricultural equipment production and distribution
was oligopolistic.11 However, as reported to the Parliamentary Committee on Farm Implement Prices
while there was some premium paid by Canadian farmers for tractors in Canada over the prices in the
U.S., that premium was relatively small (Canada. House of Commons, 1937). And the premium was larger
during the Depression than it was during the 1920s.
The Committee reviewed prices of several popular models of identical tractor models selling in
both Canada and the U.S., finding that Canadian prices were typically only about 2-3% higher than prices
in the U.S. in the late-1920s, and even lower in some years for certain models. The ratio of the price in
Canada to the price in the U.S. for some of the models reviewed in that report are shown in Table 1. The
9 The
large majority of tractors adopted were in this category.
on harvest equipment fell from 10% to 6%, tillage equipment from 12.5% to 7.5%, and plows from 15% to 10% (Phillips,
10 Rates
1956).
11 In the 1930s, both Canada and the U.S. undertook official investigations of the trade practices of the agricultural equipment
industry (Canada. House of Commons, 1937; U.S. Federal Trade Commission, 1938).
8
ratios of prices for two manufacturers’ models were essentially flat for the latter half of the 1920s. The
price gap widened in the early 1930s. Prices appeared to be stickier in Canada as U.S. prices tended to fall
faster.12 But that stickiness was not evident during the 1920s when the adoption gap opened up.
[Table 1 about here.]
As the Committee did not report on prices prior to 1926, we also constructed an index of two
aggregate tractor price series for a rough comparison for the first-half of the 1920s. For the U.S., we used
White’s (2000) nominal weighted-average price series. For Canada, we used tractor import unit values
noting that all tractors in Canada were imported. The index is constructed as the ratio of the Canadian
tractor import unit values to White’s average price.13 This ratio is presented for general comparison even
though the two series from which it is derived have been constructed very differently. White’s series is the
yearly average price of tractors produced in the U.S. weighted by the share of tractor models in production,
while the import unit value series is weighted by consumption of the models actually imported each year.
Nevertheless, despite the very different sources of data, the ratio is fairly constant from 1919 through the
mid-1920s, at a value of approximately 0.7.14 It is also reasonably stable over the latter half of the 1920s
and is somewhat comparable to the direct price ratios based on quoted prices for a specific tractor model.
The similar behavior of tractor prices in both countries over the decade establishes that differences in
adoption rates were not being motivated by differences in tractor prices.
Borrowing costs may have differed, and higher interest rates in Canada may have slowed Canadian
adoption. Canadian farmers certainly complained about the availability of credit and Canadian banks
were prohibited by law from accepting real estate as collateral for a loan.15 However, as early as 1917,
the provincial governments of Manitoba and Saskatchewan introduced farm loan programs and offered
loans to qualified farmers at rates of approximately 6–6.5% (Bates, 1939; Easterbrook, 1938, p. 102, 108–9).
Equipment purchases financed by equipment manufacturers were available at higher rates, approximately
8–9% in the late 1920s, 6–7% during the 1930s (Canada. House of Commons, 1937, p. 464–5). There is no
evidence available that suggests borrowing costs were rising in Canada compared to the U.S. in the latter
half of the 1920s. We do include interest rates in our empirical estimates as a control.
12 Also,
the Canadian dollar depreciated from 1931 to 1933, returning to par in 1934, accounting for much of the price gap.
series were deflated using the cpi for each country and currency was converted using the exchange rate. All sources
described in the data appendix.
14 The absolute size reflects the difference in the mixes of tractors produced in the U.S. and consumed in Canada.
15 While farm foreclosures became much more frequent on the U.S. Northern Great Plain, they were not nearly as large a problem
in Canada during this period. See Lew and McInnis (2007) for a discussion of this difference. For U.S. mortgage foreclosures see
Alston (1983) and for farm distress during the 1920s see Johnson (1973/1974).
13 Both
9
Because tractor usage required a sufficiently large scale of operation, it is possible that farm sizes
differed sufficiently in the latter 1920s to change adoption rates. Data on tractor adoption by farm size
only become available in the Canadian Census of Agriculture in 1931, summarized in Table 2. The table
makes clear that larger farms adopted at much higher rates. For example, in Manitoba, 81% of farms 640
acres or larger adopted tractors, though that category accounted for less than 10% of farms. Differences
in the distribution of farms by size in Canada and the U.S. could have influenced tractor adoption rates.
In fact, from 1925 to 1930 there was a relative increase in the proportion of larger farms in Saskatchewan.
Farm size categories change by census year, but the following is illustrative of the changes over the 1920s.
In 1920, 76% of farms in North Dakota and 71% of farms in Montana were larger than 259 acres, while
65% of farms in Saskatchewan were larger than 299 acres. In 1925, 37% of farms in Montana and 28% of
farms in North Dakota were larger than 499 acres, while only 19% of farms in Saskatchewan were larger
than 480 acres. By 1930, 34% of farms in North Dakota were larger than 499 acres while 33% of farms
in Saskatchewan were larger than 479 acres. If larger farms were better suited to tractor adoption, then
the relative increase in the proportion of larger farms on the Canadian Prairies in the second half of the
decade should have increased the rate of adoption by Canadian Prairie farmers. The evidence indicates
that the distribution of farms by size were very similar in both countries on the Northern Great Plains.
[Table 2 about here.]
During the 1920s, the Canadian and U.S. federal governments responded to postwar wheat price
volatility by encouraging cooperative marketing. These modest policy initiatives were quite similar in
both countries and so were unlikely to have caused diverging responses (Alston, Rucker, and Weidenmeir,
2000). There are no other policy differences that alter any of the factors to the farmers’ choice of adopting
tractors. During the Great Depression, farm policy itself took sharply differing paths in the U.S. and
Canada. New Deal policies, particularly the Agricultural Adjustment Act, played an important role in
increasing tractor adoption in the U.S. through lower interest rates and output price supports (Clarke,
1994; Sorensen, Fishback, and Kantor, 2009). The effects are readily apparent in the continued increasing
adoption rates of farmers in U.S. states over the decade 1930–1940. But in comparison to the 1930s, the
increase in adoption rates by U.S. farmers in the last half of the 1920s is even greater than in the decade
of the New Deal. And during the 1920s, farm policy had yet to evolve into its modern form, despite
increasing pressures for such changes.16
16 See Alston, Rucker, and Weidenmeir (2000) for a discussion of wheat policy in this period for the U.S. and Canada. They
conclude it had no affect on prices
10
The difference in adoption rates of farmers in the U.S. and Canada in the latter half of the 1920s
was not due to farm policy divergence. We can find reference to no other policies that would otherwise
have changed expectations of the prices of tractors, gasoline, or of interest rates. We do have evidence that
policies for labor supply relevant to farmers did differ between Canada and the U.S., and the differences
were greatest during the latter half of the 1920s. Changes to immigration policy correlate closely with
the change in adoption patterns exhibited above. The U.S. implemented restrictive quotas while Canada
adopted policies to increase immigration. And both policies were in effect by 1925.
In support of our hypothesis that diverging immigration policy affected expectations of wages, we
detail immigration policy changes in Canada and the U.S. in the 1920s. We specifically highlight how
Canadian immigration policy explicitly increased the inflow of farm labor to the Prairie West.
3
3.1
Immigration Policy Divergence and Farm Labor Supply
Seasonal Labor Demand on the Northern Great Plains
The seasonality of labor demand, and the undiversified nature of the rural economy of the Northern Great
Plains, precluded the availability of a local labor supply sufficiently large to accommodate the harvest labor
demand spike. It was this dependence on seasonal labor supply that made tractors particularly attractive
investments. Temporary labor was essential, particularly at harvest when waiting meant an increased risk
of crop damage. Because crop size varied with weather, long-range forecasting of labor demand was not
possible. And harvest labor demand was rapidly increasing during the 1920s on the Northern Great Plains
as wheat output increased.
In the U.S., harvest labor demand was met by a seasonal migration from city to farm, and was
largely an intraregional movement (Lescohier, 1924). In contrast, beginning in the 1890s, Canada’s supply
of seasonal farm labor was nationally integrated with the involvement of provincial and federal governments and railway companies setting up special harvest excursion trains to move labor from East to West
(Thompson, 1978; Haythorne, 1933). But even with the formal movement of labor, because agricultural
activity in Canada was limited to a very narrow range of latitudes, harvest labor demand tended to peak
simultaneously across the country. Combined with accelerating Prairie settlement after 1896, these two
factors led to persistent labor shortages at harvest (Haythorne, 1933). To complement the harvest excursion trains, during the latter half of the 1920s Canada returned to a relatively open immigration policy to
11
supplement its domestic labor supply.17
3.2
U.S. Immigration Quotas of the 1920s
Both Canada and the U.S. had policies of open immigration from Europe prior to World War I. During the
War, European immigration flows collapsed. After the War with the resumption of European immigration,
both countries imposed restrictions.18 The time-series pattern of immigration restrictiveness is nicely
illustrated in Timmer and Williamson (1998, 743). The U.S. introduced quotas on immigration with the
Emergency Quota Act of 1921. Total immigration under the quota was set at 3% of the total number of
foreign-born as recorded in the previous Census, which amounted to about 350,000. This was about a
third of pre-quota annual immigrant inflows. But this quota was revised downward in the Immigration
Act of 1924, reducing the annual flow by half again to about 165,000 when it went into effect in 1925.
But not only did the 1924 Act reduce total inflows, it significantly reduced access for immigrants from
Southern and Eastern Europe, the regions with large pools of unskilled labor.19 Over a period of four
years, the immigration rate to the U.S. fell to 15% of its pre-quota rate. And importantly, those admitted
were relatively higher-skilled.20
The immigration quotas would have had little effect on agriculture in the U.S. as a whole because
immigrants made up a relatively small share of the agricultural labor force—13% in 1910 declining to
11% by 1930.21 But there was substantial variation in the immigrant share by state and region. The
border states of the Northern Great Plains were among a handful of states that were relatively reliant
on immigrant labor. For these states, reductions in the supply of immigrant labor could certainly have
been sufficient to induce farmers to accelerate the substitution of capital (tractors) for labor (hired farm
workers).
California had the largest share of foreign-born in the agricultural labor force at 56% in 1910,
followed closely by Rhode Island, Arizona and Nevada.22 The three border states of the Northern Great
Plains also had significant shares of foreign-born in their agricultural labor forces, about 40% in Montana
17 There
were other motives as well, particularly the demand by railway companies for settlers to purchase their land grant holdings
(Green, 1996).
18 The U.S. did introduce a literacy test in 1917.
19 Under the 1921 law, admission by national origin was based on each country’s share in immigration in the Census of 1910. In
1924 the reference year was moved back the 1890 Census giving greater weight to Western Europe even while the total quota limit
was reduced. For example, over 300,000 immigrants arrived in 1913 from countries of Eastern Europe (excluding Poland); from
1921-1924 immigrant numbers were approximately 35,000 annually; and from 1925-1930, there were about 5,000 a year (Carter et al.,
2006, series Ad114/115).
20 Massey (2016) demonstrates this effect on skill due to the 1921 quota, which was much less restrictive than the 1924 law.
21 We identify hired male labor from IPUMS 1% samples as classified by occ1950 codes: 123, 810, 820 and 840)
22 California had a large share of immigrants from Asia and the majority of foreign-born in Arizona were Mexican.
12
and North Dakota and only slightly less in Minnesota in 1910.23 The foreign-born farm labor supply was
much more important in these three states and it declined by a larger proportion from 1910 to 1930 than
did the national average.
We focus on the European-born share of the agricultural labor force, and we identify those from
the countries of Northern and Western Europe (old) which faced modest quotas after 1920, and those
from Eastern and Southern Europe (new) which faced much more restrictive quotas. Data on the share of
foreign-born in the agricultural labor force are reported in Table 3. We include those born in the Americas,
but do not report on those from outside of the Americas or Europe as the numbers are very small for all
states except California. We highlight the three border states of the Northern Great Plains, and report
totals by census region.24
[Table 3 about here.]
The share of the European-born declined in all regions from 1910 to 1930 regardless of quota
restrictiveness, and new immigrants made up a relatively small share of the agricultural labor force. We
have broken out the three Northern Great Plains states to illustrate two features. All three states had
large shares of the agricultural labor force composed of the European-born in 1910, much larger than the
averages of their regions; and the share of the European-born declined substantially after 1910. We also
do not see any consistent differential impact of the quotas on old vs. new immigrants in the changes in
the shares in Table 3. While shares of new immigrants generally declined after 1920, so did shares of
old immigrants. In North Dakota the share of new immigrants increased slightly from 1910 to 1920 then
decreased to 1930. Whereas in Montana the share of new immigrants declined steadily through the two
decades, although new immigrants were a much larger a share in 1910. And other than in the Pacific
region, there is no evidence of a large-scale replacement of European immigrant workers with immigrants
from the Americas.25
That the quotas did not result in a much larger relative decline in new immigrants may have been
at least partly due to an increase in the return-migration rates of old immigrants (Greenwood and Ward,
2015). Once the quotas were adopted, immigrants from countries with the most restrictive quotas, the new
immigrants, were less likely to return to their country of origin. This increased the supply of unskilled
23 In 1910, Montana ranked next highest after Nevada, and North Dakota was close behind so they were among states with the
largest share of European immigrants in their agricultural labor force.
24 We exclude the South as the foreign-born made up a very small share of their agricultural labor force, less than 1% except for
Florida and Louisiana.
25 There is a modest increase in immigrant farm labor from the Americas in both Minnesota and Montana from 1920 to 1930. They
are from Mexico, not Canada, and the numbers are small, approximately a thousand workers in total.
13
immigrant labor which may have induced more of the least-skilled old immigrants to return to Europe.
Though the effect seems to have varied by region and state, it is best illustrated in the Middle Atlantic
region, where the share of the agricultural labor force comprising new immigrants increased while the
share comprising old immigrants declined.26
Seasonal labor demand, a feature of agriculture in the Northern Great Plains, was generally met
by inflows from nearby urban centers. So while there was a substantial immigrant agricultural labor
force across the three border states, seasonal peak demand drew in workers who were not principally
farm workers and therefore would not have been identified as part of the agricultural labor force. There
were immigrants enclaves in the three states, but none were particularly large except in Minneapolis–
Saint Paul, and on smaller scale in Duluth.27 The immigrant populations of these two urban centers
would have contributed to the seasonal labor supply of the Northern Great Plains. And the immigrant
populations in both Minneapolis-Saint Paul and Duluth declined after 1920 with the implementation of
the immigration quotas.
There were no large urban centers in North Dakota or Montana so the IPUMS 1% samples do not
allow for fine analysis by location. Montana was somewhat more urban than North Dakota, and there
were modestly-sized immigrant populations in Butte and Great Falls. These small urban centers may have
also contributed to meeting seasonal labor demand. And immigrant populations across all three states, in
both urban and rural locations, declined after 1920 due to the quotas.
3.3
Impact of Canadian Immigration Policy
Canada also tightened immigration after the War, but unlike the U.S. which adopted a strict formula,
Canadian policy left room for discretion.28 Amendments to the Immigration Act in 1919 substantially
extended cabinet’s ability to impose restrictions based on race, nationality or class, linking admission to
conditions of the economy or social characteristics of the immigrants. This discretion allowed the Minister
of Immigration to decide on admission criteria. And criteria were tweaked almost annually in the early
1920s. Priority was given to immigrants from the British Isles, and extended to the U.S. and some British
possessions by 1923. All others immigrants from Continental Europe were required to obtain Ministerial
approval. However immigrants from Western Europe were admitted as “preferred.” The meaning of the
26 Note that Table 3 shows only one relatively small labor market, agricultural labor, and so does not illustrate the overall impact
of quotas on old vs. new immigrants.
27 These patterns are based on total populations, not just hired agricultural labor.
28 This paragraph based on Green (1995), Kelley and Trebilcock (1998) and Canada. Parliament. House of Commons. Select
Standing Committee on Agriculture and Colonization. (1928).
14
distinction “preferred” was never formally defined by law. It was a term of classification adopted by
the Minister of Immigration and meant that immigration restrictions were to be relaxed for immigrants
from the countries so designated. The result of this discretion was large swings in numbers admitted to
Canada in the early 1920s, illustrated in Figure 4. So while policies were implemented very differently,
both Canada and the U.S. restricted immigration flows in the first half of the 1920s, and restrictions were
tightest for potential immigrants from Eastern Europe.
In 1925, the Canadian government opened a huge hole in the otherwise tight set of restrictions.
The government negotiated an agreement with Canada’s two main railway companies—the Railway
Agreement— allowing them to recruit bona fide agriculturalists and farm laborers for the Prairie provinces
from Southern and Eastern Europe. The overall effect of this policy was decidedly liberal; the inflow of
immigrants accelerated sharply after 1925 with its adoption. The second half of the 1920s was the period
of the second largest immigrant inflow rate as a share of the resident population. The Railway Agreement
remained in effect until 1930 when immigration policy became highly restrictive. So while Canada effectively opened up immigration from 1925-1930, the U.S. virtually shut down immigration when the 1924
Immigration Act went into effect in 1925.
These policy changes affected not only the supply but also the destination choice of immigrants to
Canada. Eastern European immigrants were explicitly directed to settle in the Prairie West. During the
earlier Wheat Boom era (1896–1914), only a minority of immigrants admitted had intended to settle in
the Prairie West (Green and Green, 1993). But during the 1920s immigrant destination choice shifted to
the Prairies. Evidence of this shift in destination choice, illustrated in Figure 4, implies an increase in the
supply of labor to the Prairies.
[Figure 4 about here.]
Figure 4 shows the immigration totals with the dashed line on the left axis, and the share of
immigrants choosing Prairie provinces with the solid line on the right axis. Immigration collapses with
the onset of the war. Immigration flows rise and fall with the changes in the legislation in the early 1920s,
but are steadily increasing after 1925. There is also a large jump in the share of immigrants choosing
the Prairies from 1925 to 1930, illustrating how the Railway Agreement policy affected the destination of
immigrants.
Not only did destination choice shift, the policy affected the occupational choices of immigrants.
Immigrants arriving in the latter 1920s working in agriculture were more likely to be farm laborers than
15
farmers.29 Whereas more farmers would increase demand for farm labor thereby putting upward pressure
on farm wages, an increase in the number of farm laborers would depress wages.
The numbers of immigrant farmers and immigrant farm laborers by period of arrival from the
censuses of 1931 and 1911 for comparison are reported in Table 4. The 1911 census is used for comparison
because the five years preceding the 1921 census would reflect the impact of World War I, whereas prior
to World War I, Canada did little to regulate and restrict immigration.30 The important group were the
recent arrivals, those arriving in the last five years up to the census year. This was the group impacted
by the policy changes of the latter half of the 1920s. In 1931, the distribution of recent arrivals between
farmers and farm laborers was thirty percent farmers and seventy percent farm laborers. In contrast, the
distribution of arrivals in the five years prior to 1911—a period of laissez faire immigration policy—was
sixty-six percent farmers and thirty-four percent farm laborers. In other words, among immigrant arrivals
of the last five years of each decade destined for the farm, a large majority in the 1920s were farm laborers
while the majority during the wheat boom period had been farmers.31 This relatively larger flow of farm
labor to the Prairie Provinces in the last half of the 1920s was due to the implementation of the Railway
Agreement.
[Table 4 about here.]
3.4
Agricultural Labor Markets and the Permeability of the Canada-US Border
If the labor markets in the U.S. and Canada were fully integrated, then changes in immigration policy
would have had no differential effect on one country. Any changes in aggregate immigration flows that
affected labor markets in one country would simply be offset by cross-border labor flows. While there
was a very large flow of Canadians into the U.S. through this period—the U.S. quotas did not apply to
residents of the Americas—relative to the size of the U.S. labor market, the Canadian inflow was small.
As well, there had been large movements of Canadians into the U.S. since well before the Civil War, so the
continued migration was consistent with the long run trends (McInnis, 1994). More relevant to supply of
farm labor, very few of the Canadians migrating into the U.S. in this period moved into agriculture. And
29 A farmer was the individual in charge of the farm regardless of ownership. Farm laborers were wage earners, and unpaid family
members who worked regularly for their parents.
30 Immigration flows to Canada were largest in the decade of the Wheat Boom from 1901 to 1911.
31 To be clear, this was the supply as recorded in the census of 1931. The literature stresses that a large number of seasonal workers
flowed through the Prairies during the 1920s, taking on various jobs in agriculture, lumber and resource extraction (Avery, 1995;
Danysk, 1995). Some would not have remained in agriculture by the census date in 1931 so the data in the table undoubtedly
understate the size of the agricultural labor force relative to the number of farmers in this period (Green and Green, 2016).
16
equally, there was barely a trickle of farm labor movement north from the U.S. into Canada.
Immigrant flows from Canada into the U.S. for the decade of the 1920s averaged over 90,000 annually (Carter et al., 2006, series Ad163). However, very few of those migrating were found in agriculture.
Less than 4% of immigrants from Canada arriving during the 1920s and reporting an occupation worked
in agriculture (Ruggles et al., 2015).32 Almost half of those were farm owners or tenants, or farm family workers. The proportions are almost the same if we restrict the sample to males.33 About 3% of
male immigrants from Canada arriving in the 1920s reporting an occupation worked as farm labor. The
proportions were higher in the nineteenth century but had been falling steadily into the twentieth century.
Even the total share of Canadians in the U.S. farm labor force was modest. The native-born accounted for 89.4% of male agricultural farm workers in 1930. Canadian-born male farm laborers accounted
for 5.6% of the foreign-born, or 0.6% of male farm laborers in the U.S. In 1920, those shares were 88.5%
native-born, with Canadian-born males accounting for 6.1% of all foreign-born male farm workers, making up 0.7% of all male farm laborers. The Canadian share of the farm labor force in total and among the
foreign-born was small and declining over the 1920s.34
The share of Canadian-born in the agricultural labor force in the states of Minnesota, North Dakota
and Montana was slightly larger, but was still very small. Male immigrants from Canada made up about
5.3% of all male immigrants arriving during the 1920s employed as farm labor in the three Northern
Great Plains states. As a share of the total number of male farm workers in these three states, Canadian male immigrants arriving during the 1920s accounted for less than 0.2%. Canadian immigration
could hardly have affected labor market conditions in these states during the 1920s. And the number of
Canadian immigrants moving into agriculture was declining over time. The total number of immigrant
males from Canada comprised 1.6% of male farm laborers in those three states in 1920, and 1.2% in 1930.
The Canadian-born as a share of all foreign-born male farm laborers barely changed over the decade,
from 6.9% in 1920 to 7.8% in 1930. The loss of European immigrant farm labor was mostly offset by the
native-born, with a small increase in immigrants from Mexico. Large numbers of Canadians were immigrating to the U.S., but as industrial workers and professionals. Canadians interested in farming had
many opportunities in Canada.
32 From the IPUMS 1930 census sample, using the occ1950 variable, farmers were counted as codes 100 and 830; and farm workers
as codes 123, 810, 820 and 840.
33 We focus on males because not all females working in agriculture were necessarily categorized as farmers or farm workers.
34 While there were many immigrants from Canada born elsewhere, they are more difficult to find in the Census. Regardless of
their numbers, the quotas specifically excluded European-born from transiting through Canada, requiring five-year residency in the
Americas to qualify as quota-exempt.
17
3.5
Immigration, Farm Wages and Uncertainty
The changes in immigration policy impacted farmers’ assessment of expected labor supply. Farmers in
Canada anticipated continued inflows of labor while farmers in the U.S. realized labor supply would
become increasingly inelastic. In other words, with changes in immigration policy of the mid-1920s,
farmers in Canada would have had expectations of lower wages and greater harvest labor availability
than would U.S. farmers.
The effect of this divergence in immigration policy on farm wages is illustrated in Figure 5. We
report wages with board because the Canadian source does not report wages without board directly.35
Canadian provincial wages are shown as dashed lines and U.S. state wages are solid. Overall, farm wages
in U.S. states were higher and rose faster through the 1920s than farm wages of the three Prairie provinces.
Wages in Montana in particular were well above wages in all other states and provinces, and wages in
North Dakota were above wages in all three Canadian provinces after 1924. While there are certainly
other factors that determine wage outcomes, the wage series are consistent with the immigration policy
differences.
[Figure 5 about here.]
While farm wages were lower in Canada than in the U.S. in the 1920s, the relatively modest wage differential undoubtedly understated the implications of the immigration policy in two important ways.
Immigrants themselves made adjustments to their circumstances once in Canada, and the informal manner in which the immigration policy was adopted added uncertainty to expectations of how long the
policy might remain in effect. Uncertainty is particularly relevant to the farmer’s choice of replacing
horses with a tractor (Lew, 2000). Because a tractor is a durable asset, the expected benefits of adoption
were dependent on expectations of future wage outcomes.
While immigration policy as implemented through the Railway Agreement directed immigrants to
the Prairies as farm labor, immigrants themselves were able to adapt after arrival in two ways. Immigrants
migrated out of the Prairies as there was no enforcement binding them to their initial destination. Immigrants were also able to switch from farm labor to other occupations and industries with relative ease,
particularly in conjunction with their ability to relocate.
35 Rather than reporting wages with and without board as does the USDA, the Canadian source reports wages with board and an
estimate of the value of board. By implication wages without board are equal to wages with board plus the value of board. We find
the value of board is inconsistent when compared with other measures of cost of living, so we choose to use wages with board.
18
Using census microdata, Green and Green (2016) show that earnings of farm labor declined by 4%
over the decade of the 1920s. But Green and Green (2016) also calculate counterfactual farm earnings had
immigrants been unable either to relocate from the Prairies or shift occupation. Without geographic and
occupational mobility of immigrants, farm labor earnings would have fallen substantially, by 42% over the
decade, rather than the modest 4% decline observed.
The manner in which the policy was implemented would also have increased the degree of uncertainty for farmers in their expectations of future labor supply. The Railway Agreement was implemented
as an agreement between the Minister of Immigration and the rail companies; it was not adopted into
law. That meant the agreement could be ended at any time.36 And the effect on farm wages of the ability
of immigrants to relocate geographically and to shift occupations would not have been known since this
was the first time Canadian immigration policy had made admission contingent on choice of destination
and occupation. Uncertainty increases the value of deferring the adoption decision; therefore Canadian
Prairie farmers would have rationally delayed adopting tractors relative to their counterparts in the U.S.
who faced no such uncertainty.
4
4.1
Testing the ‘Featureless’ Plain Hypothesis
The Impact of Immigration on Farm Wages in North America During the 1920s
We will first demonstrate that farm wages did in fact respond to immigration flows. Our test is for the
1920s. Not only is this is our period of investigation, it is also the period for which a complete panel of
farm labor wage data by U.S. state and Canadian province become available. Goldin (1994) has shown the
impact of immigration on wages for the U.S.; Greasley, Madsden, and Oxley (2000) have shown the impact
of immigration on wages in Canada from 1870–1913; and Green (1994) has shown its impact on Canadian
Prairie farm wages from 1900 to 1930. We propose a more robust test than those used in these three
studies. We need to control for the endogeneity between immigration and wages and we take advantage
of the panel dataset characteristics: large number of cross-sections and a relatively short time series.
We treat agricultural wages as our dependent variable. Because immigration flows and wages are
endogenous, we will instrument for immigration. Wages are also assumed to adjust with lag, therefore
we will include in our model a lagged dependent variable. Further, our set of possible instruments for
36 The agreement was controversial due to anti-immigration pressure, and was only renewed in 1928 after a formal Parliamentary
review.
19
immigration is very limited because we need data by state and province. Given the panel structure with
a large cross-section and a relatively small time series, the need for instruments, and the inclusion of a
lagged dependent variable, we will estimate our model using difference GMM. This method uses lags
of endogenous and predetermined variables themselves as instruments, and it can incorporate strictly
exogenous instruments as well.37
In addition to the instruments generated from the endogenous variables themselves, we also include
additional instruments. Since immigrants are drawn for economic motives, we instrument for immigration using measures that capture economic conditions by state. Ideally, we would like to use gdp or
unemployment, but neither are available by state and province for this period. So instead we look for reasonable proxies. Measures of manufacturing output are available by state and province in both countries,
and manufacturing was an important sector for immigrant employment. The censuses of manufactures
report gross output value, employment and intermediate input cost, by state and province. These data
are available annually by province for Canada from 1917, and bi-annually for the U.S. from 1919. We
calculate manufacturing value added per worker by subtracting cost of intermediate inputs from gross
output value and divide by number of hourly workers.38 But because these data are available for the U.S.
only bi-annually, we also use other instruments available annually.
As additional instruments, we use crop acreage and railroad mileage, the latter also used by Enflo,
Lundh, and Prado (2014). Both measures are available by state and province (Canada. Dominion Bureau of
Statistics, various, 1964; U.S. Department of Agriculture, 1910/1934; U.S. Bureau of the Census, various).
Changes in railway mileage may reflect economic activity in the state. This measure is also a proxy of
immigrant supply as states with greater rail density likely had better connections to ports of entry and
hence have larger immigrant inflows.39 Crop acreage is a proxy for state economic activity given that for
some states and provinces, agriculture was an important sector of employment. Both measures—railroad
density and crop acreage—are available by state and province and are time-varying.
For immigration flows, we use numbers of immigrants by state or province of intended destination,
and we divide these flows by state/province population to yield the immigrant inflow or absorption rate.
37 System GMM requires that the fixed effects and the instrumenting variables be uncorrelated. Because immigration policy is
correlated with the fixed effects—both Canada and the U.S. adopt immigration policies—we don’t expect that assumption to hold.
Difference GMM does not require this assumption.
38 We recognize these are rough estimates. For example, the Canadian Census of Manufactures excludes fuel costs while these
seem to be included in the U.S. data.
39 With respect to immigrant supply, Enflo, Lundh, and Prado (2014) also use distance from port to each state, but given our use
of difference GMM and given that this measure is time-invariant, it will drop out of our estimates. We could interact the measure
with time, but that will dramatically expand the number of instruments in our estimates. In fact we did try this, but the inclusion of
distance makes little difference to our results.
20
For Canada, immigrant inflows are reported as a total for the three maritime provinces: Nova Scotia, New
Brunswick and Prince Edward Island. All variables used in the estimates are therefore also aggregated into
one observation for these three provinces.40 We use monthly agricultural wages with board for workers
employed all-year by state and province. We use the full-year wage because wages by summer are not
available for the entire period.
Our panel comprises forty-nine cross-sectional units of states, provinces and aggregated provinces—
seven in Canada and forty-two in the U.S. We include data to span 1919–1933. We choose to run into the
1930s to capture more variation. When the U.S. introduces the first round of quotas in 1921, immigration
falls modestly. After the revision in 1924, the decline in immigration to the U.S. is large. In Canada immigration increases in the last five-years of the 1920s. With the onset of the Great Depression, immigration
falls for both countries, but the decline is relatively large for Canada. So including observations from the
1920s and into the 1930s yields substantial variation over time and by cross-section.
The basic model explains wages as a function of lagged wages and immigration. We also run a
second model including lagged immigration as well to capture any lagged adjustment effects of immigration due to potential regional movement of immigrants or sticky adjustment of wages. We use difference
GMM implementing forward orthogonal deviations to maximize the number of available observations,
which is important given the gaps in manufacturing value-added. We treat farm wages and immigration
as endogenous. We treat the lags of these two endogenous variables as predetermined and potentially
correlated with past error terms.
We run each of the two models three times, once for each of the three different instruments: manufacturing value-added, railway mileage and field-crop acreage. We run the models separately for each
instrument to avoid overfitting the endogenous variables. We treat these instruments as potentially endogenous because each may both affect immigration and in turn be influenced by immigration. This could
be the case if manufacturing or rail construction or agriculture are expanded in regions that have attracted
immigrants. Time indicators are also included in all specifications. Because the number of instruments
increases with the square of the number of time periods, and because we have a relatively large number
of time periods, we have collapsed the instrument set (Roodman, 2009, p.108).
Results are reported in Table 5. The first two columns report results using manufacturing valueadded as the endogenous instrument, the next two columns report results using rail mileage as the endogenous instrument, and the last columns are results using crop acreage as the endogenous instrument.
40 To
generate wages we take a population-weighted average of individual maritime province values.
21
In each regression, the coefficients on immigration are negative and statistically significant. The elasticity
on lagged wages is smaller in the specifications using manufacturing value-added, but that instrument
is only available bi-annually. Yet the estimated elasticity on immigration is of similar magnitude to the
estimates using crop acreage, a variable with full coverage. The inclusion of lagged immigration has no
significant effect on the estimates of the coefficients on immigration in any of the three different estimates,
and is only statistically significant in the model using rail mileage as an instrument. In all estimates, the
Hansen J statistic is outside the rejection range, and is always below 0.25, alleviating concern about instrument proliferation or poor specification. We also run all models with the time period limited to 1919–1929.
We did not report these as resulting changes are slight. The elasticities on immigration remain negative
and are slightly larger in magnitude, so our general conclusions still hold.
[Table 5 about here.]
We have hypothesized that immigration policy differences between Canada and the U.S. can explain
the observed difference in tractor adoption rates by Canadian and U.S. farmers of the Northern Great
Plains from 1925 to 1930. The test is in two steps: first linking immigration changes to wages, and then
linking wage differences to tractor adoption divergence. We have shown that changes in labor supply
through immigration did influence the agricultural wage rate. We now turn to the second step in our
testing—the impact of wages on tractor adoption by farmers of the Northern Great Plains in the U.S. and
Canada.
4.2
Explaining Adoption of Tractors
4.2.1
Unconditional and Enhanced Difference-in-Difference Tests
We now test for differences in tractor adoption by looking at tractor adoption by U.S. county and Canadian
census division along the international border. Our approach is to consider the change in immigration policy in the 1920s, with its consequent hypothesized impact on labor markets and labor availability to farmers, as the treatment. We estimate the impact of this policy change on the adoption of a newly-introduced
labor-saving technology, the tractor. We have observations for two jurisdictions: Canada adopted an effectively open immigration policy in 1925 while the U.S. maintained and tightened restrictions. To test
the impact of this policy we use a difference-in-difference regression to determine if changes in tractor
adoption were consistent with the changes in immigration policy.
22
Our first test is in support of our assumption that the only difference that mattered in explaining
tractor adoption was the divergence in immigration policy in 1925. While we do not have tractor count
data by county prior to 1925, we do have data by state back to 1920, shown in Figure 1. As a simple
test illustrating the pretreatment trends, we run a basic difference-in-difference test for the years 1920,
1925 and 1930. Our sample consists of the six border states and provinces of the Northern Great Plains:
Manitoba, Saskatchewan, Alberta, Minnesota, North Dakota and Montana. Because this is a small sample,
we also include South Dakota. Our estimating model is
(1)
ln traci,t = α + η xi,t + β yeari,t + γ cani,t × yeari,t + ui + ε i,t
where trac is either tractors per farm or tractor adoption odds ratios, x are covariates, and ui are the
state/province fixed effects.41 If Canada and the U.S. differed simply because of time-invariant policy
differences, those differences would be absorbed by the fixed effects. If, however, the rate of adoption
diverged between countries over time, then we hypothesize a statistically significant γ coefficient.
The γ coefficients capture differences between the countries over time relative to the base year of
1920, when adoption rates were essentially the same across the sample. Our hypothesis is that if the
treatment was the immigration policy adoption of 1925, then the effects would show up as lower adoption
rates in Canada by 1930. Therefore, the coefficient on can × 1925 should be zero, and the coefficient on
can × 1930 should be negative and statistically significant. Results are in Table 6. Crop acreage is the only
covariate included. Results support our hypothesis that the difference in adoption rates between countries
occurred between 1925 and 1930 as the coefficient on can × 1930 is negative and statistically significant.42
[Table 6 about here.]
To control for geographic heterogeneity, we analyze in more detail a small subset of this region: U.S.
counties and Canadian census divisions bordering the forty-ninth parallel.43 As the forty-ninth parallel
arbitrarily separates Canada from the U.S. (mostly) without consideration for topography or geographic
features, it will artificially divide regions that are geographically, climatically and agriculturally homogeneous. Therefore, differing outcomes for contiguous divisions on either side of the border will highlight
the treatment effect of policy differences between the two countries. We run this test over the period
41 There
is no dummy for country as it is absorbed in the fixed effects.
are unchanged if we exclude South Dakota from the sample and use only the border states and provinces.
43 The Canadian Prairie provinces are subdivided into census divisions.
42 Results
23
1925–1930.44 We again use two measures of adoption: tractors per farm, and the adoption odds ratio.45
We proceed first with a base difference-in-difference model to show that adoption by Canadian farmers
did lag U.S. adoption rates by 1930 by estimating the model in Equation 1 .
Results are reported in Table 7 in column 1 for the dependent variable tractors per farm and column
4 for the odds ratios.46 Both regressions results have negative and statistically significant coefficients on
the can×1930 interaction dummy variable, indicating that Canadian adoption fell behind U.S. adoption
rates from 1925 to 1930.
[Table 7 about here.]
The power of the difference-in-difference test is enhanced with the inclusion of control variables. We
modify the difference-in-difference regressions above by including variables to capture differences across
counties or census divisions. We capture farm differences by including cropland per farm for scale effects,
and number of cattle per farm to distinguish large western farms with substantial livestock operations.
We include the population density of each county to capture linkage to local labor markets. The greater
the population density, the better the connection for farmers to local labor markets. We also include the
user cost of a tractor. Because tractor user cost performs poorly in our regressions we also use interest
rates as an alternative. Interest rates vary more than tractor user costs in our sample. We note that tractor
user cost and interest rates are available only at the state/province level.
ln traci,t = α + η1 ln croplandi,t + η2 ln cattlei,t + θ1 ln pTracServ j,t
(2)
+ λ1 ln popDensityi,t + β yeari,t + γ cani,t × yeari,t + ui + ε i,t
where
44 We
start with 1925 because data by county are first reported in the 1925 U.S. Census of Agriculture.
discussed above (in footnote 7) we have substituted tractors per farm for the missing number of farms with tractors for U.S.
counties in 1925. The implication for our test is that because there are more tractors adopted per farm than there are farms adopting
tractors, this edited measure of adopters will understate the increase in the number of adopters from 1925 to 1930 in the U.S., which
will bias our estimates against finding increasing divergence between the two countries between 1925 and 1930.
46 Fixed effects for county/census division are included. Regressions are weighted by the number of farms and by the product of
the number of farms with tractors times the number without divided by the number of farms for regressions on tractors per farm
and odds ratios respectively.
45 As
24
trac
alternatively number of tractors per farm
or the odds ratio of tractor adoption, by county/census division
cropland
cattle
acres of cropland per farm, by county/census division
number of cattle per farm, by county/census division
pTracServ
tractor user cost, by state/province
int
or interest rates, by state/province
popDensity
population per square mile, by county/census division
i
county/census division
j
state or province.
All models are estimated using county/census divisions as fixed effects. Results for the modified
difference-in-difference regressions are reported in Table 7 in columns 2–3 for the dependent variable
tractors per farm, and columns 5–6 for odds ratios. The coefficients on cropland per farm are positive and
statistically significant across all regressions, and coefficients on the size of cattle stock are negative and
statistically significant as well. The coefficients on tractor service price are negative but not statistically
significant. When interest rates are used instead of tractor service prices, the coefficients are negative and
marginally significant at the 10% level. Substituting interest rates for tractor user cost has very little effect
on the other coefficients. Some coefficients decrease in magnitude but not in statistical significance, except
the 1930 year dummy which becomes statistically significant. Note that both tractor user cost and interest
rates vary at the state-level only, and there is very little difference by state or province within a country,
so most of the variation observed is over time or by country.
The γ coefficients on the Canada-year interaction dummy variables remain negative and statistically significant across all specifications. That implies that even with these controls included, there was
unexplained differences between adoption rates in Canada and the U.S. by 1930. We hypothesize that
these unexplained differences are due to immigration policy differences.
4.2.2
Testing for Impact of Immigration Using Farm Wages
To test for the impact of immigration via its impact on the labor market, the model with controls from
equation 2 is modified to include farm wages, with wages treated as endogenous. We test for an affect
of wages on tractor adoption directly, and we test whether the inclusion of wages in the model has any
affect on the country-year difference-in-difference interaction term. If wages explain everything, then the
25
interaction term should become insignificant with the inclusion of wages in the estimates.
Models were estimated by ols and by two-stage least squares with farm wages instrumented using
plumber wages and wheat prices received by farmers. These instruments are only available at the state/
province-level, as are farm wages, the variable they are instrumenting. Plumbers’ wages are assumed to
reflect labor market conditions, but unlikely to have been directly affected by farm mechanization. It is also
a good skilled trade for use in a cross-border comparison as the skills required of plumbers would have
been essentially identical regardless of country. The same would not be true of an average manufacturing
wage rate, as the skill mix of each country’s manufacturing labor force would differ due to differences in
the composition of manufacturing output. We also instrument using the price of wheat as it would have
been a principal determinant of the value of the marginal product of farm labor on the Northern Great
Plains. Farm mechanization would not have had a direct effect on wheat prices as they were determined
internationally.
We estimate models modified from Equation 2 with the addition of wages as an endogenous regressor. We have modified the model, dropping some of the covariates so that we can estimate the coefficient
on the endogenous variable more precisely. We have presented the full model as well for comparison.47
We report results for estimates of tractors per farm in Table 8. Three models are presented estimated both
by ols and by two-stage least squares using the two instruments: plumber wages and wheat price.48 We
performed tests of endogeneity for all two-stage least squares regressions, rejecting the null that wages
could be treated as exogenous.
[Table 8 about here.]
Regressions 1 and 4 are the base model illustrating the effect of wages on adoption. The coefficient
on wages is positive and statistically significant in both the ols and iv specifications, and the coefficient
values are similar in both the ols and iv estimates. Tests on instrument validity and weak identification
are clean.
We then tested whether the difference between Canada and the U.S. in the second half of the
1920s were due to the effect of immigration policy on wages. The interaction term can× 1930 absorbs
47 The interest rate is included rather than tractor cost because the coefficient on interest was statistically significant in Table 7.
While including all covariates makes the estimate less precise due to weak identification, the conclusions do not change. We have
dropped population density as it was not statistically significant in any specification.
48 We also tried varying the instrument set to see how sensitive results were to changed instruments. If we used only one instrument: plumbers wages, the coefficient on farm wages was not statistically significant. We also tried using a larger set of instruments,
adding in land prices and farm size. Again, their inclusion did not change the magnitude of the coefficients by much, but weak
identification became a problem. We also tried several subsets of the four, but the use of the two instruments chosen provides the
optimal results in terms of reducing weak identification.
26
unexplained differences in tractor adoption between Canada and the U.S. in the second half of the 1920s.
The results with inclusion of the interaction terms are reported in columns 2 and 5 of Table 8. In the ols
regression, the coefficient on the interaction term is not statistically significant with inclusion of wages.
The instrumental variables results suffer from weak identification as the coefficient on wages is much
larger than the coefficient estimated using ols, or estimated in iv regression 4. We also note that the
coefficient on the interaction effect is positive. So introducing wages more than offsets the interaction
effect, indicating that wage differences are the important feature explaining the divergence in adoption
rates in the latter half of the 1920s. We have also presented the full model by ols in column 3 and by iv
in column 6. While the estimates are much less precise and weak identification is more of a problem by
virtue of the lower Kleibergen-Paap Wald F statistic, the results do not contradict those of columns 4 or 5.
Farm wages remain statistically significant and the interaction term is positive.
4.2.3
Tests on Directly Contiguous County/Census Division Pairs
Our final test is to directly compare contiguous counties and census divisions. We use as our dependent
variable the ratio of the tractors per farm: the value for each Canadian census division divided by the value
for each contiguous US county. Because some census divisions straddle several counties, we generate all
pairings, eg. census division AB2 is matched with Toole, with Liberty and with Hill counties in Montana
to yield three separate observations. This yields twenty-three pairs listed geographically from west to east
in Table 9, and also illustrated in Figure 3. The ratios for both measures are larger for 1925 than for 1930
for nineteen of twenty-three pairs, meaning that adoption rates increased in the U.S. relative to Canada
from 1925 to 1930 for the large majority of comparisons. The four pairs for which the ratios increase from
1925 to 1930 are in the three counties farthest east. As well, the two comparisons of census division MB1 in
Eastern Manitoba have unusually low ratios in 1925. Eastern Manitoba differs markedly from the rest of
the Prairies. Oats is the principal crop and the land is mostly unsuited to growing wheat, and that meant
there was a much smaller advantage to tractor adoption. We note this because these two observations
do have influence over the results given the small sample, even with inclusion of fixed effects. Excluding
these two has unusually large effects on some coefficient estimates compared to results including all
observations, or compared to results dropping any two other observations. While our basic estimates
include all observations—our models include fixed effects to control for these basic differences—we also
report on changes of significance resulting from the exclusion of these two observations.
27
[Table 9 about here.]
We rerun models explaining tractor adoption using this measure as the dependent variable, and
using the equivalent ratios from our set of explanatory variables. Wages are treated as endogenous. The
instrument set was slightly modified, adding land prices along with plumber’s wage and wheat price to
maximize the Kleibergen-Paap Wald rk F value.49 Estimates for tractors per farm, run both by ols and iv
and with fixed effects identifying the comparison pair from Table 9, are reported in Table 10.
[Table 10 about here.]
Regressions are run both with and without the year indicator. Because the variables are constructed
as ratios of Canadian to U.S. values, the year indicator is in effect a country-year interaction term. The
year indicator captures the differences in tractor adoption between the two countries from 1925 to 1930
not accounted for by the covariates and fixed effects. Regression 1 includes the year indicator but excludes
wages to test for differences between countries. The year indicator is negative and marginally significant
at the 10% level.50 If we exclude that eastern Manitoba census division comparisons (MB1-Roseau and
MB1-Kittson) from regression 1, the significance on the coefficient of the year indicator improves to the 1%
level, and with little change in the coefficient value. With wages included but the year indicator excluded—
regressions 2 and 4—the coefficient on wages is statistically significant.51 And with both wages and the
year indicator included in regressions 3 and 5, neither coefficient appears statistically significant, nor are
they jointly significant.52
The evidence from regression 1 shows that farmers on the Canadian Prairies had lower tractor
adoption rates than farmers of the U.S. Northern Great Plains by 1930, and from regression 4 that wages
can explain this divergence in adoption rates. Results from regression 5 are inconclusive as to whether
the wage effect fully or only partially captures the divergence in tractor adoption between Canada and
the U.S. from 1925 to 1930. This may be due to the small sample resulting when we restrict it to directly
contiguous counties and census divisions. It might also be that wages are simply an incomplete proxy
for the impact of immigration on farmers’ decisions. Farmers were making multiperiod decisions when
49 As a set of ratios, wheat prices show little variation. We did try running our iv regressions using all the possible subsets of the
three instruments. The choice did affect the coefficient values on wages somewhat, but not the statistical significance.
50 When we ran regression 1 using tractor user cost rather than the interest rate, the year indicator was statistically significant at
the 5% level.
51 Excluding the two MB1 observations increases the magnitude and the significance of the coefficient on wages in both regressions,
but otherwise doesn’t affect inferences.
52 Excluding the two observations with MB1 from regressions 3 and 5 yields no change to the statistical significance of either
coefficient.
28
adopting a tractor and would base their decision on expectations of labor markets in the future. If farmers
chose not to adopt, that did not preclude them from changing their decision any time in the future. By not
adopting, they essentially held an option to be exercised once they were certain a tractor was preferred.
Holding this option was valuable because once the option was exercised, the choice was not entirely
reversible. Our evidence does show that adoption rates differed by country from 1925 to 1930, and wage
differences due to differences in immigration policies of the two countries was the source.
5
Conclusion
The 1920s was a period of change and transition. A particularly important change was the U.S. adoption
of quotas on European immigration. Immigration restrictions had significant effects, including providing
stimulus to the Great Migration (Collins, 1997). We can observe less obvious effects by examining the pattern of diffusion of a strongly labor-saving technology between the U.S. and Canada. The diffusion process
of tractors was beginning to accelerate through the first half of the 1920s in both countries. However, in
the latter half of the 1920s, diffusion of tractors in Canada slowed relative to the U.S.
We use the divergence in immigration policy between Canada and the U.S. in the mid-1920s as a
natural experiment to highlight the affect of immigration restrictions on the structure of farm production.
Farmers of the Northern Great Plains on both sides of the international boundary faced very similar
geographic and climatic conditions. As well, prices of inputs other than wages were very similar and
tending to converge through this period. This similarity of conditions allows us to test the impact of the
change in immigration policy on tractor adoption.
We show that the changes in immigration policy did in fact lower wages for farm labor on the
Canadian Prairies. Farmers south of the international border—the only ‘feature’ of our ‘featureless plain’—
faced different labor market conditions due to immigration restrictions. They faced an expectation of an
inelastic and increasingly scarce supply of labor. Consequently, wages were higher on the U.S. side of
the Northern Great Plains, and U.S. farmers could only have expected wages to increase. Given the
uncertainty in the administration of Canadian immigration policy, farmers very well might have at least
been uncertain about its future effects on labor markets, but it certainly served to increase the supply of
farm labor while the policy remained in effect. The result was a divergence in rate of adoption of tractors
between the Canadian and U.S. sides of the Northern Great Plains.
This historical example illustrates how a macro-policy can have unexpected effects. Immigration
29
restrictions were introduced at the stage in the process of tractor diffusion when small changes in factor
prices could swing the advantage between old and new technologies. This sensitivity of tractor adoption to
immigration policy makes our example particularly illustrative of the potential for subtle and potentially
widespread effects of tweaks to policy at the macroeconomic level.
Our analysis is not intended as support of immigration restrictions. We do argue that their implementation accelerated diffusion of the tractor, and by implication contributed to productivity gains.
But the inducement for farmers to adopt tractors was through the wage effect of immigration restrictions,
which surely imposed costs elsewhere. We also view the Canadian policy of explicitly directing immigrants to a region of the country as mistaken. The replacement of horses with tractors was inevitable
given technological change. Therefore, a policy to deliberately and artificially supply labor was flawed, or
more specifically was adopted to serve a very narrow interest. In the years that followed, there was a large
outmigration from the Prairies. The region was effectively overpopulated. Had Canada instead returned
to its open immigration policy of the prewar period, immigrants would undoubtedly have self-selected
by region and occupation, as they had done in the previous era of mass-migration. Tractor adoption
would have proceeded more rapidly, and fewer immigrants would have moved through the Prairies. As
immigration policy, by definition, incorporates restrictions, the selection process by which admissibility is
determined must bear careful scrutiny.
6
Data Appendix
Wage Rates
Farm wages are the average annual monthly wages with board (U.S. Department of Agriculture,
1951, 1948/1955; Canada. Dominion Bureau of Statistics, 1908/1930). USDA source reports wages
with and without board. Canadian source reports wages with board and the value of board.
Plumbers wages are reported by city, so for the Prairie rates Calgary and Edmonton are averaged
for Alberta, Regina is used for Saskatchewan, and Winnipeg for Manitoba (Canada. Department of
Labour, various). For the U.S. plumbers wages are reported in cities in all three states for 1920 only,
but not for North Dakota after 1920 (U.S. Bureau of Labor, various). For 1925 and 1930, wages in
Omaha, Butte and Minneapolis are averaged to represent wages in North Dakota since this average
approximates very closely reported wage rates in Grand Forks in 1920, the year for which data in all
three states are available.
30
Manufacturing Value Added
Reported in The Canada Yearbook (Canada. Dominion Bureau of Statistics, various) and the Statistical
Abstract of the United States (U.S. Bureau of the Census, various).
Price Deflators
All prices are expressed in real 1913 $U.S. U.S. prices deflated using the BLS CPI Index (Carter
et al., 2006, series Cc1); Canadian prices deflated using Department of Labour Cost of Living index
for 1913 on (Urquhart, 1965, series J139), and the Bertram-Percy index (Bertram and Percy, 1979).
Canadian values converted to US using Canada–U.S. dollar exchange rate (Urquhart, 1965, series
H625).
Immigration
Immigration rates by state or province of intended destination are taken yearly (U.S. Bureau of Immigration, 1910/1930; Canada. Department of Immigration and Colonization, 1920–1925, 1924/25–
1930/31). Destination of immigrants to the Canadian Prairies in the period 1925–1930 is clearly
distorted as reported in the Immigration Department reports, with a disproportionate number indicating Manitoba as destination. As immigrants from the non-preferred countries were admitted
only for agricultural employment most of those indicating Manitoba were in fact using Winnipeg as
a point to coordinate their employment elsewhere on the Prairies. Immigrant destination for these
years in Canada are calculated as the total number of immigrants to all three Prairie provinces allocated according to the distribution of immigrant arrivals for this period as reported in the 1931
Census (Canada. Dominion Bureau of Statistics, 1936a).
Crop Acreage, State/Province-level
Canada from Handbook of Agricultural Statistics (Canada. Dominion Bureau of Statistics, 1964); U.S.
from Yearbook of Agriculture (U.S. Department of Agriculture, 1910/1934).
Tractor User Cost
Tractor user cost is calculated as tractor prices × (interest rate + inflation expectation + depreciation
rate). Inflation expectations are derived using a centered three-year moving average of the CPI for
each country. U.S. Tractor prices and depreciation rates are from Olmstead and Rhode (2001). Tractor
prices for Canada from Canada. House of Commons (1937, p. 124, 141).
Interest Rates
31
Canada: Annual Report (Canadian Farm Loan Board, 1930/31–1954/55); Financial History of Canadian
Governments (Bates, 1939); and Farm Credit in Canada (Easterbrook, 1938).
U.S.: Farm-Mortgage Credit Facilities in the United States (Horton, Larsen, and Wall, 1942) andYearbook
of Agriculture (U.S. Department of Agriculture, 1910/1934). The latter reports only regional rates.
Wheat Prices, State/Province-level
Prices received by farmers, Canada from Handbook of Agricultural Statistics (Canada. Dominion Bureau of Statistics, 1964); U.S. from Yearbook of Agriculture (U.S. Department of Agriculture, 1910/1934).
County-level Farm Data
Farm counts
Tractor numbers and farms adopting
Crop acreage
Area in farms
Cattle stocks
Area in county/census division
Land values



















Census of Agriculture, various years


















Population
Census of Population, various years
32
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38
Table 1: Tractor Prices, Ratios of Canadian:US Prices ($C), and Index Ratio
International
Harvester
15/30
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
0.99
0.99
0.99
0.99
0.99
0.99
1.09
1.11
1.16
1.07
Massey
Harris
index
10/20
1.02
1.02
1.02
1.02
1.02
1.02
1.02
1.03
1.10
1.06
1.03
1.03
1.00
1.02
1.09
1.05
1.08
1.04
0.8
0.7
0.7
0.7
0.6
0.7
0.7
0.9
0.7
0.8
0.9
0.8
0.8
Source: (Canada. House of Commons, 1937, p. 131,
1091)
Notes: Prices for International Harvester are from
Regina and Billings. Prices for Massey Harris are from
Regina and Denver. Model for Massey Harris comparison not stated. For definition of index, see text.
39
Table 2: Proportion of Farms Adopting Tractors by Size, Prairie Provinces,
1931 & 1961
proportion of farms
adopting
Size (ac)
distribution of farms
by farm size category
Manitoba
Saskatchewan
Alberta
Manitoba
Saskatchewan
Alberta
0.27
0.04
0.14
0.33
0.54
0.81
0.32
0.04
0.10
0.26
0.44
0.74
0.25
0.04
0.10
0.25
0.41
0.63
0.14
0.43
0.25
0.09
0.09
0.03
0.32
0.32
0.14
0.19
0.05
0.44
0.27
0.10
0.15
0.90
0.52
0.83
0.94
0.97
0.98
0.92
0.42
0.75
0.90
0.95
0.97
0.90
0.43
0.81
0.92
0.96
0.97
0.06
0.24
0.29
0.18
0.23
0.01
0.12
0.22
0.19
0.46
0.04
0.21
0.26
0.16
0.33
1931
all
≤ 100
101 – 299
300 – 479
480 – 639
640 +
1961
all
≤ 69
70 – 239
240 – 399
400 – 559
560 +
Source: Canada. Dominion Bureau of Statistics (1936a, Table XXVIII) and Canada. Dominion
Bureau of Statistics (1963, Table 32)
40
Table 3: Agricultural Labor, Male, Percentage Foreign-born by Location of Country of
Birth, Northern Great Plains States and Regions
Europe
North & West
Americas
South & East
1910
1920
1930
1910
1920
1930
1910
1920
1930
Minnesota
North Dakota
Montana
27.0
29.7
22.1
17.8
17.6
15.3
9.3
9.2
13.2
1.2
7.3
17.2
1.5
7.8
8.0
1.1
4.5
4.8
1.0
3.6
2.7
1.0
2.9
2.4
1.8
2.5
3.9
New England
Middle Atlantic
East North Central
West North Central
Mountain
Pacific
11.9
10.4
8.5
14.2
11.8
12.0
6.4
6.5
5.5
8.6
5.4
9.7
6.1
6.0
4.0
5.4
4.5
6.4
10.0
6.4
1.5
2.4
7.9
11.3
9.3
7.7
2.2
1.7
5.0
11.6
8.4
8.2
1.8
1.2
3.2
6.5
9.1
1.4
1.3
0.8
4.4
4.9
7.0
0.5
0.9
0.7
10.2
8.0
7.5
1.0
0.6
0.9
9.4
14.8
6.5
4.4
3.1
2.9
3.1
2.3
2.2
3.2
3.8
United States
Notes: Male hired labor in agriculture defined by IPUMS variable occ1950, codes: 123, 810, 820, 840. Northwestern Europe includes: Belgium, British Isles, Denmark, Finland, France, Germany, Iceland, Luxembourg,
Netherlands, Norway, Sweden, and Switzerland. Southeastern Europe includes; Albania, Austria, Bulgaria,
Czechoslovakia, Estonia, Greece, Hungary, Italy, Latvia, Lithuania, Malta, Russia/USSR, Poland, Portugal,
Romania, Spain, and Yugoslavia. Regions are defined by the Census Bureau.
Source: Ruggles et al. (2015).
41
Table 4: Immigrant Farmers and Farm Labor
in Canada, by Years Since Arrival, 1931
and 1911
farmers
farm labor
Panel A: 1931
0–5 years
21,938
6–10 years
13,294
11–20 years
51,992
> 20 years 120,205
0.30
0.46
0.66
0.82
50,605
15,455
27,299
25,737
0.70
0.54
0.34
0.18
Panel B: 1911
0–5 years
6–10 years
11–20 years
> 20 years
0.66
0.79
0.78
0.92
33,348
11,470
6,824
3,360
0.34
0.21
0.22
0.08
63,636
43,264
24,406
37,294
Notes: Data are for males only. Source: Canadian Century
Research Infrastructure (CCRI-IRCS) (2009), Canada. Dominion Bureau of Statistics (1936b)
42
Table 5: GMM Difference Regressions: Real Agricultural Wage, 1919–1933
(1)
waget−1
imsharet
imsharet−1
Instruments:
mva
rail mileage
crop acreage
Hansen J
AR(1)
AR(2)
(2)
(3)
0.6567∗∗∗ 0.6800∗∗∗ 0.8365∗∗∗
[0.0688]
[0.0747]
[0.0583]
−0.0621∗∗∗ −0.0692∗∗∗ −0.0533∗∗∗
[0.0128]
[0.0155]
[0.0180]
0.0125
[0.0133]
x
0.188
0.000
0.480
(4)
(5)
0.9235∗∗∗ 0.8395∗∗∗
[0.0695]
[0.0456]
−0.0705∗∗∗ −0.0338∗∗
[0.0191]
[0.0149]
0.0443∗∗
[0.0182]
(6)
0.8596∗∗∗
[0.0430]
−0.0429∗∗
[0.0165]
0.0213
[0.0133]
x
0.173
0.000
0.547
x
x
0.128
0.000
0.529
0.114
0.000
0.792
x
0.133
0.000
0.571
x
0.137
0.000
0.665
Standard errors in brackets.
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.01
Notes: The dependent variable is farm wages with board, deflated by CPI, and converted to $US. Results from GMM difference regressions using two-step estimator with Windmeijer correction. Regressions
have 591 observations over 49 states and provinces with 52 instruments. imshare is immigrant share of
state/province population. All variables are log transformed. Regressions include year indicator variables,
not reported.
Sources: See text.
43
Table 6:
Tractor
Adoption,
State/Province-level:
Unconditional Differencein-Difference Regressions
Tractors
per Farm
can×1925
can×1930
Odds
Ratio
−0.0013 −0.0147
[0.1104]
[0.1116]
−0.4186∗∗ −0.8393∗∗∗
[0.1577]
[0.1124]
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.01
Notes: Standard errors in brackets are robust
to clustering by state/province. N = 21.
Base year is 1920.
44
Table 7: Tractor Adoption: Difference-in-Difference Regressions
Tractors
per Farm
(1)
ln cropland
ln cattle
ln pTracServ
ln int
ln popDensity
1930
can×1930
Odds
Ratio
(2)
(3)
1.6654∗∗∗
1.6496∗∗∗
(4)
(5)
2.4227∗∗∗
(6)
2.4204∗∗∗
[0.2712]
−0.9783∗∗∗
[0.3620]
[0.1749]
[0.1787]
[0.2618]
−0.5384∗∗ −0.6447∗∗
−0.7700∗∗
[0.2436]
[0.2404]
[0.3419]
−1.6484
−0.4973
[4.5237]
[5.8095]
−0.0282∗
−0.0400∗
[0.0168]
[0.0210]
−0.0427 −0.1438
−0.5283 −0.6963
[0.2713]
[0.2501]
[0.5648]
[0.5323]
0.8540∗∗∗ 0.2160
0.5136∗∗∗ 1.0851∗∗∗ 0.7649
0.6413∗∗∗
[0.0828]
[1.3313]
[0.1235]
[0.1325]
[1.7072]
[0.1719]
−0.4512∗∗∗ −0.4815∗∗∗ −0.3113∗∗∗ −0.5239∗∗∗ −0.5377∗∗∗ −0.3303∗∗
[0.0998]
[0.1168]
[0.0998]
[0.1509]
[0.1627]
[0.1340]
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.01
Notes: Standard errors in brackets are robust to clustering by county/census division. The dependent
variables are log-transformed. Fixed effects and constant not reported. N = 98. Coefficients and
standard errors on ln int are divided by 100. See text for discussion.
45
Table 8: Tractor Adoption Regressions, Tractors per Farm, including Wages
ols
ln f armWage
ln cropland
ln cattle
ln int
ln popDensity
1930
can × 1930
iv
(1)
(2)
(3)
(4)
(5)
3.7170∗∗∗
2.8266∗∗∗
2.8718∗∗∗
4.6895∗∗∗
9.3685∗∗∗
[0.4887]
[0.9309]
[0.9777]
1.2879∗∗∗ 1.3839∗∗∗ 1.3431∗∗∗
[0.2091]
[0.2251]
[0.2308]
−0.4300∗
[0.2219]
−4.2972∗∗∗
[1.4782]
−0.2274
[0.1906]
0.4643∗∗∗ 0.5363∗∗∗ 0.2583∗∗
[0.0435]
[0.0830]
[0.1285]
−0.1252
0.0693
[0.1237]
[0.1431]
Hansen J
Kleibergen-Paap rk LM
Kleibergen-Paap Wald rk F
Stock-Wright LM S
[0.5834]
[2.4829]
1.1236∗∗∗ 0.5502
[0.2330]
[0.4936]
0.4862∗∗∗ 0.2242∗
[0.0454]
[0.1304]
0.4994∗
[0.2620]
0.838
31.97∗∗∗
133.58∗∗∗
25.79∗∗∗
0.236
13.49∗∗∗
7.47
8.01∗∗
(6)
11.9526∗∗
[4.7826]
0.3740
[0.6982]
0.2489
[0.4485]
−8.9771∗∗
[4.0439]
−0.4919
[0.4088]
−0.5492
[0.4664]
1.2728∗
[0.6723]
1.879
7.34∗∗
4.61
6.41∗∗
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.01
Standard errors in brackets are robust to clustering by county/census division.
Notes: Dependent variable is log tractors per farm. N = 98. Fixed effects and constant not reported.
Instruments in IV regressions are: plumber wage and wheat price. See text for discussion.
46
Table 9: Ratios of Tractors per Farm and Proportion
of Farms Adopting Tractors, By Contiguous
Counties/Census Divisions, 1925–1930
Canada Census
Division–US County
AB2 – Glacier
AB1 – Toole
AB1 – Liberty
AB1 – Hill
SK4 – Hill
SK4 – Blaine
SK4 – Phillips
SK3 – Valley
SK3 – Daniels
SK2 – Sheridan
SK2 – Divide
SK1 – Burke
SK1 – Renville
MB4 – Bottineau
MB4 – Rolette
MB3 – Rolette
MB3 – Towner
MB3 – Cavalier
MB2 – Cavalier
MB2 – Pembina
MB2 – Kittson
MB1 – Kittson
MB1 – Roseau
Tractors
per Farm
Proportion
Farms with
Tractors
1925
1930
1925
1930
2.07
0.92
1.16
0.94
0.85
1.40
2.48
1.55
1.13
0.98
1.01
1.23
1.35
1.63
2.28
2.20
0.92
1.10
1.44
0.84
0.86
0.27
0.67
1.08
0.66
0.61
0.57
0.45
0.77
1.49
0.54
0.52
0.64
0.76
0.82
0.62
0.66
1.34
1.23
0.60
0.88
1.01
0.82
0.91
0.31
0.69
1.84
0.76
0.96
0.78
0.79
1.30
2.31
1.41
1.03
0.87
0.89
1.14
1.25
1.54
2.15
2.07
0.87
1.03
1.20
0.70
0.71
0.24
0.60
1.05
0.63
0.58
0.54
0.46
0.76
0.73
0.56
0.55
0.63
0.74
0.84
0.62
0.71
1.39
1.27
0.65
0.91
0.97
0.81
0.97
0.34
0.67
Source: Canada. Dominion Bureau of Statistics (1927, 1936a); U.S.
Bureau of the Census (1927, 1931)
Notes: See Figure 3 for map of counties and census divisions.
47
Table 10: Regressions of Ratios by Contiguous County/Census Division-Pairs:
1925–1930
ols
(1)
ln f armWage
ln cropland
ln cattle
ln int
ln popDensity
1930
—
1.7412∗∗
[0.7398]
−0.7392∗∗∗
[0.2497]
−4.0160∗
[2.1501]
−0.0962
[0.1163]
−0.2136∗
[0.1236]
iv
(2)
(3)
1.4189∗
(4)
(5)
2.2984∗∗
0.7854
3.8674
[0.8147]
[1.9830]
[0.9150]
[4.0497]
1.8649∗∗
1.7937∗∗
1.6417∗∗
1.9998∗∗
[0.7092]
[0.7830]
[0.6294]
[0.8680]
−0.7659∗∗∗ −0.7497∗∗∗ −0.7022∗∗∗ −0.7909∗∗∗
[0.2349]
[0.2599]
[0.2139]
[0.2592]
−4.7960∗∗ −4.3310∗ −3.0852
−5.5674∗
[1.8302]
[2.4550]
[2.1488]
[2.7025]
−0.0698
−0.0826
−0.0721
−0.0291
[0.1237]
[0.1337]
[0.1229]
[0.1855]
−0.1024
0.3338
—
—
[0.3096]
[0.5718]
Hansen J
Endogeneity
Kleibergen-Paap rk LM
Kleibergen-Paap Wald rk F
Stock-Wright LM S
2.47
2.66∗
11.65∗∗∗
37.82∗∗∗
12.40∗∗∗
4.49
0.62
8.15∗∗
4.79
8.62∗∗
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.01
Standard errors in brackets are robust to clustering by geographic unit as defined in Table 9.
Notes: N = 46. Dependent variable is ln tractors per farm. Fixed effects and constant not reported.
Instruments in IV regressions are: plumber wage, wheat price and land price.
48
Figure 1: Proportion of Farms with Tractors: Great Plains States and Prairie Provinces (U.S. Bureau of
the Census, 1961; Canada. Dominion Bureau of Statistics, 1963)
49
Figure 2: Tractors per Farm: U.S. Counties and Canadian Census Divisions–Along the 49th Parallel
(Canada. Dominion Bureau of Statistics, 1927, 1936a; U.S. Bureau of the Census, 1927, 1931)
50
Figure 3: Proportion of Farms With Tractors: Canada–U.S. Border Counties, 1925-1960 (Canada. Dominion Bureau of Statistics, 1927, 1936a, 1945, 1949, 1953, 1960, 1963; U.S. Bureau of the Census,
1927, 1931, 1942, 1946, 1952, 1956, 1961)
51
Figure 4: Immigration Inflows and Share Destined for Prairie Provinces, Canada, 1901–1932 (Canada.
Department of Immigration and Colonization, 1920–1925, 1924/25–1930/31)
52
Figure 5: Real Farm Wages With Board, Northern Great Plains Border States and Provinces (U.S. Department of Agriculture, 1951; Canada. Dominion Bureau of Statistics, 1908/1930)
53