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Railroads and Local Economic Development: The United States in the 1850s

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  • Michael R. Haines
  • Robert A. Margo

Abstract

We use county and individual-level data from 1850 and 1860 to examine the economic impact of gaining access to a railroad. Previous studies have found that rail access was positively correlated with the value of agricultural land at a point in time, and have interpreted this correlation as evidence that rail access chiefly benefitted agricultural land owners in the manner predicted by the Hekscher-Ohlin or Von Theunen models. We use a difference-in-difference strategy, comparing changes in outcomes in counties that gained rail access in the 1850s to those that either gained access earlier or did not have access before the Civil War. Most of the estimated effects are small and the signs are not wholly consistent with either model, under the null hypothesis that agriculture was the chief beneficiary of rail access. For example, we find that rail access appears to have increased urbanization, raised the likelihood of participation in the service sector, decreased agricultural yields, and reduced the share of improved acreage in total land area, opposite to the patterns predicted by either the Heckscher-Ohlin or Von Theunen models.

Suggested Citation

  • Michael R. Haines & Robert A. Margo, 2006. "Railroads and Local Economic Development: The United States in the 1850s," NBER Working Papers 12381, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12381
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    References listed on IDEAS

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    1. Guy Michaels, 2008. "The Effect of Trade on the Demand for Skill: Evidence from the Interstate Highway System," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 683-701, November.
    2. Ransom, Roger L, 1970. "Social Returns from Public Transport Investment: A Case Study of the Ohio Canal," Journal of Political Economy, University of Chicago Press, vol. 78(5), pages 1041-1060, Sept.-Oct.
    3. Coffman, Chad & Gregson, Mary Eschelbach, 1998. "Railroad Development and Land Value," The Journal of Real Estate Finance and Economics, Springer, vol. 16(2), pages 191-204, March.
    4. Craig, Lee A & Palmquist, Raymond B & Weiss, Thomas, 1998. "Transportation Improvements and Land Values in the Antebellum United States: A Hedonic Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 16(2), pages 173-189, March.
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    Cited by:

    1. Dave Donaldson & Richard Hornbeck, 2016. "Railroads and American Economic Growth: A "Market Access" Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 799-858.
    2. Redding, Stephen J. & Turner, Matthew A., 2015. "Transportation Costs and the Spatial Organization of Economic Activity," Handbook of Regional and Urban Economics, Elsevier.
    3. Jeremy Atack & Michael R. Haines & Robert A. Margo, 2008. "Railroads and the Rise of the Factory: Evidence for the United States, 1850-70," NBER Working Papers 14410, National Bureau of Economic Research, Inc.
    4. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 155-253.
    5. Andrabi, Tahir & Kuehlwein, Michael, 2010. "Railways and Price Convergence in British India," The Journal of Economic History, Cambridge University Press, vol. 70(02), pages 351-377, June.
    6. Berger, Thor & Enflo, Kerstin, 2017. "Locomotives of local growth: The short- and long-term impact of railroads in Sweden," Journal of Urban Economics, Elsevier, vol. 98(C), pages 124-138.
    7. Shicheng Li & Zhaofeng Wang & Yili Zhang & Yukun Wang & Fenggui Liu, 2016. "Comparison of Socioeconomic Factors between Surrounding and Non-Surrounding Areas of the Qinghai–Tibet Railway before and after Its Construction," Sustainability, MDPI, Open Access Journal, vol. 8(8), pages 1-17, August.
    8. Katherine White, 2008. "Sending or Receiving Stations? The Dual Influence of Railroads in Early 20th-Century Great Plains Settlement," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 27(1), pages 89-115, February.

    More about this item

    JEL classification:

    • N51 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - U.S.; Canada: Pre-1913
    • N71 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: Pre-1913

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