The Antebellum Transportation Revolution and Factor-Price Convergence

53 Pages Posted: 27 Jun 2000 Last revised: 30 Jun 2010

See all articles by Matthew J. Slaughter

Matthew J. Slaughter

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Date Written: October 1995

Abstract

In antebellum America an extensive network of canals and railroads was constructed which slashed transportation costs across regions. This 'transportation revolution' presents an interesting case study of the factor-price convergence (FPC) theorem. In this paper I look for integration of regional labor markets driven by FPC by studying the extent to which commodity prices and factor prices converged across regions between 1820 and 1860. My primary result is that I find very little evidence of antebellum FPC across regions. I do find that commodity prices equalized quite markedly. But I also find that nominal labor prices equalized very little, if at all. Given this result, I go on to discuss two aspects of the antebellum economy which very likely helped prevent FPC: differences across regions in endowments and technology. This finding underscores that the FPC theorem does not have unambiguous empirical predictions. How commodity prices feed into factor prices depends crucially on parameters such as endowments and technology.

Suggested Citation

Slaughter, Matthew J., The Antebellum Transportation Revolution and Factor-Price Convergence (October 1995). NBER Working Paper No. w5303. Available at SSRN: https://ssrn.com/abstract=225367

Matthew J. Slaughter (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
36
Abstract Views
1,473
PlumX Metrics