Persistence, Shocks, and Reversal: Evidence from China since the Neolithic Revolution, 5000 BCE-2000 CE 

Abstract

We investigate the long-term persistence and modern reversal of historical agglomerations under various drivers, using China since the Neolithic Revolution as a unique setting. Our analysis is based on a unique dataset of archaeological findings and historical census data. We find that regions with more agglomerated activity after the Neolithic Revolution (5000 BCE-2000 BCE) consistently had higher population densities over subsequent millennia until the mid-nineteenth century, despite wars and other shocks occurring in between. The Neolithic developmental patterns were initially shaped by location fundamentals (first nature) and were sustained through "second natures," including state institutions, physical transportation infrastructure, and cultural infrastructure, creating path dependence. However, the persistence of Neolithic patterns was ultimately reversed after modern institutions ("treaty ports") were transplanted to China from the mid-nineteenth century onward. Adjacency to these institutions became new location fundamentals and provided advantages in new second natures, such as technology, socioeconomic organizations, and human capital, which established fresh path dependence. We establish causality using a Difference-inDifferences (DiD) strategy supplemented with an instrumental variable (IV) analysis. Our findings show that a significant shock in productivity can alter the value of locational fundamentals and bring new second natures that reshape spatial patterns.

Keywords: Neolithic Revolution, Agglomerations, Long-term persistence, Shocks, Reversal, Location fundamentals, Path dependence JEL Classification: N95, O11, R12

JEL Classification: N95, O11, R12