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

  • Michael R. Haines
  • Robert A. Margo

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.

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File URL: http://www.nber.org/papers/w12381.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12381.

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Date of creation: Jul 2006
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Publication status: published as Rosenbloom, J. (ed.) Quantitative Economic History: The Good of Counting. London: Routledge, 2008.
Handle: RePEc:nbr:nberwo:12381
Note: DAE
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. 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.
  2. Michaels, Guy, 2007. "The Effect of Trade on the Demand for Skill - Evidence from the Interstate Highway System," CEPR Discussion Papers 6056, C.E.P.R. Discussion Papers.
  3. 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 1041-60, Sept.-Oct.
  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 173-89, March.
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  1. Historical Economic Geography

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