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Railroads, Reallocation, and the Rise of American Manufacturing

Author

Listed:
  • Richard Hornbeck

    (University of Chicago and NBER)

  • Martin Rotemberg

    (New York University)

Abstract

We examine the impacts of market integration on the development of American manufacturing, as railroads expanded through the latter half of the 19th century. Using county-by-industry data from the Census of Manufacturers, we estimate substantial impacts on manufacturing productivity growth from increases in county market access due to expansion of the railroad network. These productivity impacts are driven by increases in "reallocative efficiency," as input usage increased in areas where value marginal product exceeded marginal cost.

Suggested Citation

  • Richard Hornbeck & Martin Rotemberg, 2019. "Railroads, Reallocation, and the Rise of American Manufacturing," 2019 Meeting Papers 396, Society for Economic Dynamics.
    • Handle: RePEc:red:sed019:396
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    References listed on IDEAS

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    Cited by:

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    2. Jeremy Atack & Robert A. Margo & Paul Rhode, 2020. "‘Mechanization Takes Command’: Inanimate Power and Labor Productivity in Late Nineteenth Century American Manufacturing," NBER Working Papers 27436, National Bureau of Economic Research, Inc.
    3. Atack, Jeremy & Margo, Robert A. & Rhode, Paul W., 2022. "Industrialization and urbanization in nineteenth century America," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    4. Jin, Zhi & Yang, Yinan & Zhang, Liguang, 2021. "Geographic proximity and cross-region merger and acquisitions: Evidence from the opening of high-speed rail in China," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    5. Despina Gavresi & Anastasia Litina & George Tsiachtsiras, 2022. "Railways and Roadways to Trust," Discussion Paper Series 2022_08, Department of Economics, University of Macedonia, revised Sep 2022.
    6. Hanlon, W.Walker & Heblich, Stephan, 2022. "History and urban economics," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    7. Lindgren, Erik & Pettersson-Lidbom, Per & Tyrefors, Björn, 2021. "The Causal Effect of Transport Infrastructure: Evidence from a New Historical Database," Working Paper Series 1407, Research Institute of Industrial Economics.
    8. Chan, Jeff, 2022. "Farming output, concentration, and market access: Evidence from the 19th-century American railroad expansion," Journal of Development Economics, Elsevier, vol. 157(C).
    9. Jonas Hjort & Golvine de Rochambeau & Vinayak Iyer & Fei Ao, 2020. "Informational Barriers to Market Access: Experimental Evidence from Liberian Firms," NBER Working Papers 27662, National Bureau of Economic Research, Inc.
    10. repec:spo:wpecon:info:hdl:2441/6jahov5tde8vt9aplqrgg3trl4 is not listed on IDEAS
    11. Bo, Shiyu & Liu, Cong & Zhou, Yan, 2023. "Military investment and the rise of industrial clusters: Evidence from China’s self-strengthening movement," Journal of Development Economics, Elsevier, vol. 161(C).
    12. Taylor Jaworski & Carl Kitchens & Sergey Nigai, 2023. "Highways And Globalization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(4), pages 1615-1648, November.
    13. Taylor Jaworski & Ian Keay, 2020. "Openness to Trade and the Spread of Industrialization: Evidence from Canada during the First Era of Globalization," NBER Working Papers 27716, National Bureau of Economic Research, Inc.
    14. Fenske, James & Kala, Namrata & Wei, Jinlin, 2023. "Railways and cities in India," Journal of Development Economics, Elsevier, vol. 161(C).
    15. Wache, Benjamin, 2021. "Information Frictions, Global Capital Markets, and the Telegraph," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242444, Verein für Socialpolitik / German Economic Association.
    16. Jeffrey P. Clemens & Parker Rogers, 2020. "Demand Shocks, Procurement Policies, and the Nature of Medical Innovation: Evidence from Wartime Prosthetic Device Patents," CESifo Working Paper Series 8781, CESifo.
    17. Edward L. Glaeser & James M. Poterba, 2021. "Economic Analysis and Infrastructure Investment," NBER Books, National Bureau of Economic Research, Inc, number glae-6.
    18. Zarate Vasquez,Roman David, 2022. "Spatial Misallocation,Informality, and Transit Improvements : Evidence from Mexico City," Policy Research Working Paper Series 9990, The World Bank.
    19. Eric Melander, 2020. "Transportation Technology, Individual Mobility and Social Mobilisation," CAGE Online Working Paper Series 471, Competitive Advantage in the Global Economy (CAGE).
    20. repec:spo:wpmain:info:hdl:2441/6jahov5tde8vt9aplqrgg3trl4 is not listed on IDEAS
    21. Fernihough, Alan, 2024. "Economic Geography and the Irish Border: A Market Access Approach," QBS Working Paper Series 2024/02, Queen's University Belfast, Queen's Business School.
    22. repec:hal:wpspec:info:hdl:2441/6jahov5tde8vt9aplqrgg3trl4 is not listed on IDEAS
    23. Han Zhang & Dongli Wu, 2022. "The Impact of Transport Infrastructure on Rural Industrial Integration: Spatial Spillover Effects and Spatio-Temporal Heterogeneity," Land, MDPI, vol. 11(7), pages 1-18, July.
    24. repec:hal:spmain:info:hdl:2441/6jahov5tde8vt9aplqrgg3trl4 is not listed on IDEAS

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • N61 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: Pre-1913
    • N71 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: Pre-1913
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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