Too much rolling in the hay

ECONOMISTS have long argued that tariffs are bad for a country’s development in the long run.

They raise prices for consumers, steer capital away from the most productive investments and breed inefficiency and rent-seeking by limiting competition from abroad. To that long list add another baleful consequence: by coddling farmers, agricultural tariffs encourage them to have more children and to educate them less, hampering economic growth for decades into the future.

So, at any rate, suggests a paper presented at the conference of Britain’s Economic History Society in Cambridge earlier this month. The authors, Vincent Bignon of the Bank of France and Cecilia García-Peñalosa of Aix-Marseille School of Economics, look at the relationship between agricultural tariffs and demography in France in the 1890s. In particular, they look at how the Méline tariff on grain, which was introduced in 1892, affected France’s demographic transition.

A demographic transition is a country’s gradual shift from high fertility and mortality to lower rates of both. Economists see it as an important factor in development. If a greater proportion of children survive, parents tend to have fewer of them and to invest more in their health and education. That, in turn, increases a country’s human capital and thus its growth prospects.

The paper shows that this process can be delayed by agricultural tariffs. The Méline tariff raised food prices by more than a quarter, as well as boosting agricultural wages. The authors found that fertility rates rose and primary-school attendance fell in the districts that benefited most from the tariff. This was because higher farm wages enabled parents in rural areas to have more children. It also reduced the relative return to education by increasing wages for (uneducated) agricultural labourers, thereby discouraging parents from sending their children to school.

As a result, Mr Bignon and Ms García-Peñalosa argue, the tariff strongly reduced human-capital formation in late-19th-century France. Their results show that in areas with the most employment in agriculture, the Méline tariff halted a century-long decline in the birth rate and set educational development back 15 years. This may go some way to explaining why the economy of Britain, which did not protect agriculture at all at the time, outperformed France’s during the early 20th century.

There is some evidence of a similar relationship in the modern world. Studies of the impact of agricultural tariffs in sub-Saharan Africa suggest that they encourage subsistence farming rather than prompting export industries to grow. Just as in France, that is likely to boost fertility and dent enrolment rates in schools. Farmers may like the sound of agricultural protectionism, but it does not do their children any good at all.