Transportation and development: insights from the U.S., 1840-1860
AbstractWe study the effects of large transportation costs on economic development. We argue that the Midwest and the Northeast of the U.S. is a natural case because starting from 1840 decent data is available showing that the two regions shared key characteristics with today’s developing countries and that transportation costs were large and then came way down. To disentangle the effects of the large reduction in transportation costs from those of other changes that happened during 1840?1860, we build a model that speaks to the distribution of people across regions and across the sectors of production. We find that the large reduction in transportation costs was a quantitatively important force behind the settlement of the Midwest and the regional specialization that concentrated agriculture in the Midwest and industry in the Northeast. Moreover, we find that it led to the convergence of the regional per capita incomes measured in current regional prices and that it increased real GDP per capita. However, the increase in real GDP per capita is considerably smaller than that resulting from the productivity growth in the nontransportation sectors.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 425.
Date of creation: 2009
Date of revision:
Other versions of this item:
- Arilton Teixeira & Berthold Herrendorf & James A. Schmitz Jr., 2009. "Transportation and Development:Insights from the U.S. 1840-1860," Fucape Working Papers 18, Fucape Business School.
- NEP-ALL-2009-07-11 (All new papers)
- NEP-HIS-2009-07-11 (Business, Economic & Financial History)
- NEP-URE-2009-07-11 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Tombe, Trevor, 2011.
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- Tombe, Trevor, 2010. "Regions, frictions, and migrations in a model of structural transformation," MPRA Paper 26641, University Library of Munich, Germany.
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