The Productivity of U.S. States Since 1880

This study identifies the determinants of interstate variation in labor productivity levels at twenty-year intervals between 1880 and 1980. Focusing on fundamental rather than proximate influences, we find that institutional characteristics, physical geography, and resource abundance can account for a high proportion of the differences in state productivity levels. States with navigable waterways, a large minerals endowment, and no slaves in 1860, on average, had higher labor productivity levels throughout the sample period. No consistent support was found for two other influences given prominence in cross-country analyses of differences in incomes or productivity levels: climate and the quality of government.