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Agglomeration Economies and Productivity Growth: U.S. Cities, 1880-1930

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  • Crafts, Nicholas
  • Klein, Alexander

Abstract

We investigate the role of industrial structure in productivity growth in U.S. cities between 1880 and 1930 using a new dataset constructed from the Census of Manufactures. We find that increases in specialization were associated with faster productivity growth but that diversity only had positive effects on productivity performance in large cities. We interpret our results as providing strong support for the importance of Marshallian externalities. Industrial specialization increased considerably in U.S. cities in the early 20th century, probably as a result of improved transportation, and we estimate that this resulted in significant gains in labor productivity

Suggested Citation

  • Crafts, Nicholas & Klein, Alexander, 2015. "Agglomeration Economies and Productivity Growth: U.S. Cities, 1880-1930," CEPR Discussion Papers 10673, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10673
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    Keywords

    agglomeration economies; industrial structure; Jacobian externalities; manufacturing productivity; Marshallian externalities;

    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-
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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