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Railroads and Local Economic Development: The United States in the 1850s

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  • Michael R. Haines
  • Robert A. Margo

Abstract

We use county and individual-level data from 1850 and 1860 to examine the economic impact of gaining access to a railroad. Previous studies have found that rail access was positively correlated with the value of agricultural land at a point in time, and have interpreted this correlation as evidence that rail access chiefly benefitted agricultural land owners in the manner predicted by the Hekscher-Ohlin or Von Theunen models. We use a difference-in-difference strategy, comparing changes in outcomes in counties that gained rail access in the 1850s to those that either gained access earlier or did not have access before the Civil War. Most of the estimated effects are small and the signs are not wholly consistent with either model, under the null hypothesis that agriculture was the chief beneficiary of rail access. For example, we find that rail access appears to have increased urbanization, raised the likelihood of participation in the service sector, decreased agricultural yields, and reduced the share of improved acreage in total land area, opposite to the patterns predicted by either the Heckscher-Ohlin or Von Theunen models.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12381.

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Date of creation: Jul 2006
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Publication status: published as Rosenbloom, J. (ed.) Quantitative Economic History: The Good of Counting. London: Routledge, 2008.
Handle: RePEc:nbr:nberwo:12381

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  1. Guy Michaels, 2006. "The effect of trade on the demand for skill - evidence from the interstate highway system," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 19767, London School of Economics and Political Science, LSE Library.
  2. Coffman, Chad & Gregson, Mary Eschelbach, 1998. "Railroad Development and Land Value," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 16(2), pages 191-204, March.
  3. Craig, Lee A & Palmquist, Raymond B & Weiss, Thomas, 1998. "Transportation Improvements and Land Values in the Antebellum United States: A Hedonic Approach," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 16(2), pages 173-89, March.
  4. Ransom, Roger L, 1970. "Social Returns from Public Transport Investment: A Case Study of the Ohio Canal," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 78(5), pages 1041-60, Sept.-Oct.
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Cited by:
  1. Katherine White, 2008. "Sending or Receiving Stations? The Dual Influence of Railroads in Early 20th-Century Great Plains Settlement," Population Research and Policy Review, Springer, Springer, vol. 27(1), pages 89-115, February.
  2. Andrabi, Tahir & Kuehlwein, Michael, 2010. "Railways and Price Convergence in British India," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 70(02), pages 351-377, June.
  3. Thor Berger & Kerstin Enflo, 2013. "Locomotives of Local Growth: The Short- and Long-Term Impact of Railroads in Sweden," Working Papers, European Historical Economics Society (EHES) 0042, European Historical Economics Society (EHES).
  4. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 155-253.
  5. Jeremy Atack & Michael R. Haines & Robert A. Margo, 2008. "Railroads and the Rise of the Factory: Evidence for the United States, 1850-70," NBER Working Papers, National Bureau of Economic Research, Inc 14410, National Bureau of Economic Research, Inc.

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  1. Historical Economic Geography

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