We investigate how transportation networks influence agricultural technology adoption and structural transformation. Our empirical results show that improved transport networks lower non-labor input prices relative to wages and promote the adoption of labor-saving technologies. These changes increase labor productivity and facilitate structural transformation. In our calibrated model, transportation improvements alone account for a 2.2-2.5 percentage-point decline in India's agricultural employment share, representing approximately 16-18 percent of the total decline observed in the data. A counterfactual exercise in which farmers cannot choose their technology results in a smaller structural transformation, highlighting the role of farmers' adoption decision in the process of structural transformation.
Transportation Networks, Technology Adoption, and Structural Transformation (forthcoming in Journal of International Economics)
2026/07/28