Commercialization as exogenous shocks: The effect of the soybean trade and migration in Manchurian villages, 1895-1934

The effects of commercialization and migration in traditional agrarian economies such as China's during the nineteenth and twentieth centuries have been a subject of ferocious debate. Using data from Manchuria on soybean cultivation and exports, we employ difference-in-differences and instrumental variable approaches to demonstrate a significantly positive relationship between growing soybeans for export and the returns to migration. Those who migrated to Manchuria in response to high market prices, and to villages more suitable for cultivating soy prospered most; they owned approximately two-thirds more of the arable land and one-third more of houses than those who failed to do so. Evidence suggests that the positive welfare effect of commercialization-cum-migration was confined not only to the rich, who seek to relieve the “land constraint” at home, but possibly also to the poor.

► We analyze the effect of commercialization in early twentieth-century Manchuria. ► Those who migrated to villages best suited for soybean cultivation owned more farmland. ► They also owned more houses and experienced upward social mobility more generally. ► Commercialization benefited the early migrants of landowners and self-cultivators. ► It also benefited tenant farmers and wage laborers who came after the soybean boom.