Agglomeration Economies and Productivity Growth: U.S. Cities, 1880-1930

41 Pages Posted: 29 Jun 2015

See all articles by Alexander Klein

Alexander Klein

University of Kent - Canterbury Campus

Nicholas Crafts

University of Warwick

Date Written: June 2015

Abstract

We investigate the role of industrial structure in productivity growth in U.S. cities between 1880 and 1930 using a new dataset constructed from the Census of Manufactures. We find that increases in specialization were associated with faster productivity growth but that diversity only had positive effects on productivity performance in large cities. We interpret our results as providing strong support for the importance of Marshallian externalities. Industrial specialization increased considerably in U.S. cities in the early 20th century, probably as a result of improved transportation, and we estimate that this resulted in significant gains in labor productivity.

Keywords: agglomeration economies, industrial structure, Jacobian externalities, manufacturing productivity, Marshallian externalities

JEL Classification: N91, N92, O7, R32

Suggested Citation

Klein, Alexander and Crafts, Nicholas, Agglomeration Economies and Productivity Growth: U.S. Cities, 1880-1930 (June 2015). CEPR Discussion Paper No. DP10673. Available at SSRN: https://ssrn.com/abstract=2624608

Alexander Klein

University of Kent - Canterbury Campus ( email )

Keynes College
Canterbury, Kent CT2 7NP
United Kingdom

Nicholas Crafts (Contact Author)

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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