I investigate the role of regulation and factor prices in the rapid, widespread adoption of mechanical harvesting technology by Brazilian sugarcane growers. I use worker- and establishment-level data to test the regulation using complementary regression discontinuity and difference-in-differences approaches. I find that regulation is, at best, a partial explanation, accounting for no more than one quarter of the dramatic change in harvesting practices. I develop a tipping-point model to show how rising wages may have played an important role even though the change in wages was gradual and the change in harvesting was abrupt; instrumental variables estimates imply that increasing wages alone are sufficient to explain the adoption of green technology.
Presented at the Southern Economic Association Annual Meeting (2015), University of Michigan (2016), Northeastern Universities Economic Development Consortium (scheduled 2016 - poster), Texas A&M (scheduled 2016), Michigan State University (scheduled 2016).