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Railroads and American Economic Growth: A “Market Access” Approach

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  • Dave Donaldson
  • Richard Hornbeck

Abstract

This paper examines the historical impact of railroads on the American economy. Expansion of the railroad network may have affected all counties directly or indirectly – an econometric challenge that arises in many empirical settings. However, the total impact on each county is captured by changes in that county's “market access,” a reduced-form expression derived from general equilibrium trade theory. We measure counties' market access by constructing a network database of railroads and waterways and calculating lowest-cost county-to-county freight routes. As the railroad network expanded from 1870 to 1890, changes in market access were capitalized into county agricultural land values with an estimated elasticity of 1.1. County-level declines in market access associated with removing all railroads in 1890 are estimated to decrease the total value of US agricultural land by 64%. Feasible extensions to internal waterways or improvements in country roads would have mitigated 13% or 20% of the losses from removing railroads.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19213.

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Date of creation: Jul 2013
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Handle: RePEc:nbr:nberwo:19213

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  16. Hornbeck, Richard A., 2010. "Barbed Wire: Property Rights and Agricultural Development," Scholarly Articles 11185832, Harvard University Department of Economics.
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Cited by:
  1. Nico Voigtländer & Hans-Joachim Voth, 2014. "Highway to Hitler," Working Papers 769, Barcelona Graduate School of Economics.
  2. Brunt, Liam & Cannon, Edmund, 2013. "Integration in the English wheat market 1770-1820," Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics 12/2013, Department of Economics, Norwegian School of Economics.
  3. Holger Breinlich & Gianmarco I.P. Ottaviano & Jonathan R.W. Temple, 2013. "Regional growth and regional decline," Economics Discussion Papers, University of Essex, Department of Economics 729, University of Essex, Department of Economics.
  4. Edward L. Glaeser & Sari Pekkala Kerr & William R. Kerr, 2013. "Entrepreneurship And Urban Growth:An Empirical Assessment With Historical Mines," Working Papers, Center for Economic Studies, U.S. Census Bureau 13-15, Center for Economic Studies, U.S. Census Bureau.
  5. Dincecco, Mark & Katz, Gabriel, 2012. "State Capacity and Long-Run Performance," MPRA Paper 38299, University Library of Munich, Germany.
  6. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0120, Spatial Economics Research Centre, LSE.
  7. A. Kerem Cosar & Banu Demir, 2014. "Domestic Road Infrastructure and International Trade: Evidence from Turkey," Koç University-TUSIAD Economic Research Forum Working Papers, Koc University-TUSIAD Economic Research Forum 1406, Koc University-TUSIAD Economic Research Forum.
  8. Nicolas Ziebarth, 2013. "Are China and India Backwards? Evidence from the 19th Century U.S. Census of Manufactures," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 86-99, January.
  9. Stephen J. Redding & Matthew A. Turner, 2014. "Transportation Costs and the Spatial Organization of Economic Activity," NBER Working Papers 20235, National Bureau of Economic Research, Inc.
  10. Hunt Allcott & Allan Collard-Wexler & Stephen D. O'Connell, 2014. "How Do Electricity Shortages Affect Productivity? Evidence from India," NBER Working Papers 19977, National Bureau of Economic Research, Inc.

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