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Closing Time : The Local Equilibrium Effects of Prohibition

Author

Listed:
  • Howard, Greg

    (University of Illinois)

  • Ornaghi, Arianna

    (University of Warwick)

Abstract

How do different local policies in a federal system affect local land values, production, and sorting? We study the question exploiting a large historical policy change : U.S. Alcohol Prohibition in the early twentieth century. Comparing same-state early and late adopters of county dry laws in a difference-in-differences design, we find that early Prohibition adoption increased population and farm real estate values. Moreover, we find strong effects on farm productivity consistent with increased investment due to a land price channel. In equilibrium, the policy change disproportionately attracted immigrants and African-Americans.

Suggested Citation

  • Howard, Greg & Ornaghi, Arianna, 2021. "Closing Time : The Local Equilibrium Effects of Prohibition," The Warwick Economics Research Paper Series (TWERPS) 1347, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1347
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    References listed on IDEAS

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    More about this item

    Keywords

    Tiebout sorting ; migration ; land values ; productivity ; amenities ; credit JEL Classification: N91 ; R13 ; E22;
    All these keywords.

    JEL classification:

    • N91 - Economic History - - Regional and Urban History - - - U.S.; Canada: Pre-1913
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • E - Macroeconomics and Monetary Economics

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