An Arbitrage Model in Crop Rotation in 18th Century England

The Industrial Revolution in England was characterised by early and rapid labour release from agriculture to industry. This was facilitated by rising levels of labour productivity in agriculture which permitted labour to be released without excessive upward pressure on food prices. New technology played a central role in raising agricultural productivity but the importance of particular innovations remains controversial. In this paper we develop an arbitrage model of crop rotation which enables us to estimate the impact of crop rotation on wheat yields, requiring only the yields and prices of crops to be known. We apply this technique to eighteenth century English agriculture to assess the importance of two new crops in raising the yield of wheat (the primary agricultural output). Contrary to the received wisdom, we show that turnips substantially pushed up wheat yields but clover pushed down wheat yields. We confirm this result by comparing our estimates to both experimental data and production function estimates. Further detailed analysis facilitated by the new model enables us to explain this surprising result in terms of management practices pursued by farmers.