🌡️ The heat tax

Between 1985 and 2017, Brazilian farms raised output by 129% while using 17% less land and 31% less family labor. Purchased inputs — fertilizer, pesticides, animal feed, hired labor — rose 243%. Weight every input together and the bundle grew by under 1% a year, against output growth of 2.59%. The gap is what economists call total factor productivity, the residual that captures how much more a sector extracts from the same resources.

A working paper released this month by the Inter-American Development Bank tries to explain where that residual came from, and what has quietly been eating into it…

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