Quasi-experimental study reveals extensive margin contraction and stable yields in mechanized agriculture after earthquakes, suggesting a need for in-kind capital aid.
Key Points
To determine how capital destruction and credit constraints from major natural disasters impact mechanized agricultural supply across extensive and intensive production margins.
Adapted the Agricultural Household Model with a Leontief (fixed-proportions) framework to evaluate short-run capital-labor substitutability under liquidity constraints.
Employed a Synthetic Difference-in-Differences design combining district-level crop statistics with satellite remote sensing data to assess the impact of the February 2023 earthquakes in Türkiye.
Wheat cultivation contracted by 8.5% at the extensive margin relative to the pre-treatment mean, while crop yields (intensive margin) showed a null or positive effect concentrated in lower-quality districts via Ricardian selection.
New tractor registrations fell by 24% and agricultural credit dropped by 16.5%, confirming that capital loss combined with credit constraints generates a scarcity trap.