IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/33100.html
   My bibliography  Save this paper

Did Tariffs Make American Manufacturing Great? New Evidence from the Gilded Age

Author

Listed:
  • Alexander Klein
  • Christopher M. Meissner

Abstract

We study the relationship between tariffs and labor productivity in US manufacturing between 1870 and 1909. Using highly dis-aggregated tariff data, state-industry data for the manufacturing sector, and an instrumental variable strategy, results show that tariffs reduced labor productivity. Tariffs also generally reduced the average size of establishments within an industry but raised output prices, value-added, gross output, employment, and the number of establishments. We also find evidence of heterogeneity in the association between tariffs and value added, gross output, employment, and establishments across groups of industries. We conclude that tariffs may have reduced labor productivity in manufacturing by weakening import competition and by inducing entry of smaller, less productive domestic firms. Our research also reveals that lobbying by powerful and productive industries may have been at play. The era’s high tariffs are unlikely to have helped the US become a globally competitive manufacturer.

Suggested Citation

  • Alexander Klein & Christopher M. Meissner, 2024. "Did Tariffs Make American Manufacturing Great? New Evidence from the Gilded Age," NBER Working Papers 33100, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:33100
    Note: DAE ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w33100.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Douglas A. Irwin, 2017. "Clashing over Commerce: A History of US Trade Policy," NBER Books, National Bureau of Economic Research, Inc, number irwi-2, February.
    2. Allen, Robert C., 2014. "American Exceptionalism as a Problem in Global History," The Journal of Economic History, Cambridge University Press, vol. 74(2), pages 309-350, June.
    3. Huberman, Michael & Meissner, Christopher M. & Oosterlinck, Kim, 2017. "Technology and Geography in the Second Industrial Revolution: New Evidence from the Margins of Trade," The Journal of Economic History, Cambridge University Press, vol. 77(1), pages 39-89, March.
    4. Djogbenou, Antoine A. & MacKinnon, James G. & Nielsen, Morten Ørregaard, 2019. "Asymptotic theory and wild bootstrap inference with clustered errors," Journal of Econometrics, Elsevier, vol. 212(2), pages 393-412.
    5. Carter,Susan B. & Gartner,Scott Sigmund & Haines,Michael R. & Olmstead,Alan L. & Sutch,Richard & Wri (ed.), 2006. "The Historical Statistics of the United States 5 Volume Hardback Set," Cambridge Books, Cambridge University Press, number 9780521817912, January.
    6. José Luis Montiel Olea & Carolin Pflueger, 2013. "A Robust Test for Weak Instruments," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 31(3), pages 358-369, July.
    7. Helen Hunter, 1955. "Innovation, Competition, and Locational Changes in the Pulp and Paper Industry: 1880-1950," Land Economics, University of Wisconsin Press, vol. 31(4), pages 314-327.
    8. James Foreman-Peck, 2019. "An American and European technological difference: The early motor car power source," Business History, Taylor & Francis Journals, vol. 61(7), pages 1158-1174, October.
    9. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, February.
    10. Sibylle H. Lehmann & Kevin H. O'Rourke, 2011. "The Structure of Protection and Growth in the Late Nineteenth Century," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 606-616, May.
    11. repec:ucp:bkecon:9780226398969 is not listed on IDEAS
    12. Joseph H. Davis, 2004. "An Annual Index of U. S. Industrial Production, 1790–1915," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1177-1215.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hilt, Eric & Jaremski, Matthew & Rahn, Wendy, 2022. "When Uncle Sam introduced Main Street to Wall Street: Liberty Bonds and the transformation of American finance," Journal of Financial Economics, Elsevier, vol. 145(1), pages 194-216.
    2. MacKinnon, James G., 2023. "Fast cluster bootstrap methods for linear regression models," Econometrics and Statistics, Elsevier, vol. 26(C), pages 52-71.
    3. Wang, Wenjie, 2021. "Wild Bootstrap for Instrumental Variables Regression with Weak Instruments and Few Clusters," MPRA Paper 106227, University Library of Munich, Germany.
    4. Nick Hanley & Les Oxley & David Greasley & Eoin McLaughlin & Matthias Blum, 2016. "Empirical Testing of Genuine Savings as an Indicator of Weak Sustainability: A Three-Country Analysis of Long-Run Trends," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 313-338, February.
    5. Jeremy Greenwood & Nezih Guner & Ricardo Marto, 2021. "The Great Transition: Kuznets Facts for Family-Economists," Economie d'Avant Garde Research Reports 33, Economie d'Avant Garde.
    6. Wang, Wenjie & Zhang, Yichong, 2024. "Wild bootstrap inference for instrumental variables regressions with weak and few clusters," Journal of Econometrics, Elsevier, vol. 241(1).
    7. Nathaniel Lane, 2020. "The New Empirics of Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 209-234, June.
    8. Talan B. Işcan, 2009. "Engel and Baumol: How much can they explain the rise of service employment in the United States?," Working Papers daleconwp2009-03, Dalhousie University, Department of Economics.
    9. Ritschl, Albrecht & Uebele, Martin & Sarferaz, Samad, 2008. "The U.S. Business Cycle, 1867-1995: A Dynamic Factor Approach," CEPR Discussion Papers 7069, C.E.P.R. Discussion Papers.
    10. Alexander, Patrick D. & Keay, Ian, 2019. "Responding to the First Era of Globalization: Canadian Trade Policy, 1870–1913," The Journal of Economic History, Cambridge University Press, vol. 79(3), pages 826-861, September.
    11. Broadberry, Stephen & Crafts, Nicholas, 2010. "Openness, Protectionism And Britain’S Productivity Performance Over The Long-Run," CAGE Online Working Paper Series 36, Competitive Advantage in the Global Economy (CAGE).
    12. Hogan, Thomas L., 2015. "Has the Fed improved U.S. economic performance?," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 257-266.
    13. Ritschl, Albrecht & Sarferaz, Samad & Uebele, Martin, 2008. "The U.S. business cycle, 1867-1995: dynamic factor analysis vs. reconstructed national accounts," Economic History Working Papers 22305, London School of Economics and Political Science, Department of Economic History.
    14. Michelle Alexopoulos & Jon Cohen, 2016. "The Medium Is the Measure: Technical Change and Employment, 1909—1949," The Review of Economics and Statistics, MIT Press, vol. 98(4), pages 792-810, October.
    15. Wenjie Wang & Yichong Zhang, 2021. "Wild Bootstrap for Instrumental Variables Regressions with Weak and Few Clusters," Papers 2108.13707, arXiv.org, revised Jan 2024.
    16. Iscan Talan, 2010. "How Much Can Engel's Law and Baumol's Disease Explain the Rise of Service Employment in the United States?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-43, September.
    17. Douglas A. Irwin, 2019. "U.S. Trade Policy in Historical Perspective," NBER Working Papers 26256, National Bureau of Economic Research, Inc.
    18. Thomas L. Hogan & Daniel J. Smith, 2022. "War, money & economy: Inflation and production in the Fed and pre-Fed periods," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 35(1), pages 15-37, March.
    19. Ritschl, Albrecht & Sarferaz, Samad & Uebele, Martin, 2016. "The U.S. business cycle, 1867–2006: a dynamic factor approach," LSE Research Online Documents on Economics 67420, London School of Economics and Political Science, LSE Library.
    20. Valerie A. Ramey & Sarah Zubairy, 2018. "Government Spending Multipliers in Good Times and in Bad: Evidence from US Historical Data," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 850-901.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:33100. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.