Technical Change, Land Quality, and Income Distribution: A General Equilibrium Analysis

This paper investigates the distributional effects of technical progress in agriculture. A small computable general equilibrium model is developed in which agricultural production occurs in two environments with fixed land resources of different quality. The analytical structure permits not only the rate but also the factor biases of technical change to differ between environments. Distributional results are generated for several classes of households distinguished both by their ownership of factors and by their consumption patterns. The results demonstrate that technical change produces distributional outcomes which are highly sensitive to its factor biases and to prior differences in land quality.