Tariffs and trees: The effects of the Austro-Hungarian customs union on specialization and land-use change

Abstract

This article examines the impact of the 1850 Austro-Hungarian customs union on production land-use outcomes. Using newly digitized data from the Second Military Survey of the Habsburg Monarchy, we apply a spatial discontinuity design to estimate the impact of trade liberalization on land use. We find that the customs union increased cropland area by 8 percent per year in Hungary between 1850 and 1855, while forestland area decreased by 6 percent. We provide suggestive evidence that this result is not confounded by the emancipation of the serfs, population growth, or technological change in agriculture.