In antebellum America an extensive network of canals and railroads was constructed which slashed transportation costs across regions. This 'transportation revolution' presents an interesting case study of the factor-price convergence (FPC) theorem. In this paper I look for integration of regional labor markets driven by FPC by studying the extent to which commodity prices and factor prices converged across regions between 1820 and 1860. My primary result is that I find very little evidence of antebellum FPC across regions. I do find that commodity prices equalized quite markedly. But I also find that nominal labor prices equalized very little, if at all. Given this result, I go on to discuss two aspects of the antebellum economy which very likely helped prevent FPC: differences across regions in endowments and technology. This finding underscores that the FPC theorem does not have unambiguous empirical predictions. How commodity prices feed into factor prices depends crucially on parameters such as endowments and technology.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
5303.
Length: Date of creation: Oct 1995 Date of revision: Handle: RePEc:nbr:nberwo:5303
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Find related papers by JEL classification: F15 - International Economics - - Trade - - - Economic Integration J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
References listed on IDEAS 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.:
Howard Bodenhorn & Hugh Rockoff, 1992.
"Regional Interest Rates in Antebellum America,"
NBER Chapters,
in: Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, pages 159-187
National Bureau of Economic Research, Inc.
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Claudia Goldin & Robert A. Margo, 1992.
"Wages, Prices, and Labor Markets before the Civil War,"
NBER Chapters,
in: Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, pages 67-104
National Bureau of Economic Research, Inc.
[Downloadable!]
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