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Agglomeration Externalities and Productivity Growth : U.S. Cities in the Railroad Era, 1880-1930

Author

Listed:
  • Klein, Alexander

    (University of Kent)

  • Crafts, Nicholas

    (University of Warwick)

Abstract

We investigate the role of industrial structure in labor productivity growth in U.S. cities during the ‘second industrial revolution’. We find that greater specialization was associated with faster productivity growth but that diversity only had positive effects in large cities. We interpret our results as demonstrating the existence of dynamic Marshallian externalities. Industrial specialization increased considerably in U.S. cities at this time, partly because of improved transportation which brought additional gains in labor productivity. Although this would augment the social savings from railroads, the magnitude is too small to undermine Robert Fogel’s claim that his estimate is an upper bound.

Suggested Citation

  • Klein, Alexander & Crafts, Nicholas, 2015. "Agglomeration Externalities and Productivity Growth : U.S. Cities in the Railroad Era, 1880-1930," CAGE Online Working Paper Series 235, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:235
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    More about this item

    Keywords

    agglomeration externalities; industrial structure; manufacturing productivity; social savings JEL Classification: N91; N92; O18; R12;
    All these keywords.

    JEL classification:

    • N91 - Economic History - - Regional and Urban History - - - U.S.; Canada: Pre-1913
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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