Railroads, Reallocation, and the Rise of American Manufacturing

76 Pages Posted: 2 Jan 2020

See all articles by Richard Hornbeck

Richard Hornbeck

University of Chicago - Booth School of Business

Martin Rotemberg

New York University (NYU)

Multiple version iconThere are 2 versions of this paper

Date Written: December 30, 2019

Abstract

We examine impacts of market integration on the development of American manufacturing, as railroads expanded through the latter half of the 19th century. Using new county-by-industry data from the Census of Manufactures, we estimate substantial impacts on manufacturing productivity from relative increases in county market access as railroads expanded. In particular, the railroads increased economic activity in marginally productive counties. Allowing for the presence of factor misallocation generates much larger aggregate economic gains from the railroads than previous estimates. Our estimates highlight how broadly-used infrastructure or technologies can have much larger economic impacts when there are inefficiencies in the economy.

JEL Classification: D24, N61, N71, R1

Suggested Citation

Hornbeck, Richard and Rotemberg, Martin, Railroads, Reallocation, and the Rise of American Manufacturing (December 30, 2019). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2019-146. Available at SSRN: https://ssrn.com/abstract=3512196 or http://dx.doi.org/10.2139/ssrn.3512196

Richard Hornbeck (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 South Woodlawn Avenue
Chicago, IL 60637
United States

Martin Rotemberg

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
7
Abstract Views
88
PlumX Metrics