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The Antebellum Transportation Revolution and Factor-Price Convergence

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  • Matthew J. Slaughter

Abstract

In antebellum America an extensive network of canals and railroads was constructed which slashed transportation costs across regions. This 'transportation revolution' presents an interesting case study of the factor-price convergence (FPC) theorem. In this paper I look for integration of regional labor markets driven by FPC by studying the extent to which commodity prices and factor prices converged across regions between 1820 and 1860. My primary result is that I find very little evidence of antebellum FPC across regions. I do find that commodity prices equalized quite markedly. But I also find that nominal labor prices equalized very little, if at all. Given this result, I go on to discuss two aspects of the antebellum economy which very likely helped prevent FPC: differences across regions in endowments and technology. This finding underscores that the FPC theorem does not have unambiguous empirical predictions. How commodity prices feed into factor prices depends crucially on parameters such as endowments and technology.

Suggested Citation

  • Matthew J. Slaughter, 1995. "The Antebellum Transportation Revolution and Factor-Price Convergence," NBER Working Papers 5303, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5303
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    References listed on IDEAS

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    1. James, John A., 1976. "The Development of the National Money Market, 1893-1911," The Journal of Economic History, Cambridge University Press, vol. 36(04), pages 878-897, December.
    2. O'Rourke, Kevin & Williamson, Jeffrey G., 1994. "Late Nineteenth-Century Anglo-American Factor-Price Convergence: Were Heckscher and Ohlin Right?," The Journal of Economic History, Cambridge University Press, vol. 54(04), pages 892-916, December.
    3. Robert A. Margo, 1992. "Wages and Prices during the Antebellum Period: A Survey and New Evidence," NBER Chapters,in: American Economic Growth and Standards of Living before the Civil War, pages 173-216 National Bureau of Economic Research, Inc.
    4. Adams, Donald R., 1992. "Prices and Wages in Antebellum America: The West Virginia Experience," The Journal of Economic History, Cambridge University Press, vol. 52(01), pages 206-216, March.
    5. Claudia Goldin & Robert A. Margo, 1992. "Wages, Prices, and Labor Markets before the Civil War," NBER Chapters,in: Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, pages 67-104 National Bureau of Economic Research, Inc.
    6. Rosenbloom, Joshua L., 1991. "Occupational Differences in Labor Market Integration: The United States in 1890," The Journal of Economic History, Cambridge University Press, vol. 51(02), pages 427-439, June.
    7. Margo, Robert A. & Villaflor, Georgia C., 1987. "The Growth of Wages in Antebellum America: New Evidence," The Journal of Economic History, Cambridge University Press, vol. 47(04), pages 873-895, December.
    8. Leamer, E.E., 1995. "The Heckscher-Ohlin Model in Theory and Practice," Princeton Studies in International Economics 77, International Economics Section, Departement of Economics Princeton University,.
    9. Howard Bodenhorn & Hugh Rockoff, 1992. "Regional Interest Rates in Antebellum America," NBER Chapters,in: Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, pages 159-187 National Bureau of Economic Research, Inc.
    10. Hatton, Timothy J. & Williamson, Jeffrey G., 1991. "Wage gaps between farm and city: Michigan in the 1890s," Explorations in Economic History, Elsevier, vol. 28(4), pages 381-408, October.
    11. Hatton, Timothy J. & Williamson, Jeffrey G., 1991. "Unemployment, employment contracts, and compensating wage differentials: michigan in the 1890s," The Journal of Economic History, Cambridge University Press, vol. 51(03), pages 605-632, September.
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    Cited by:

    1. Kevin H. O'Rourke & Jeffrey G. Williamson, 1999. "The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why," NBER Working Papers 7411, National Bureau of Economic Research, Inc.
    2. Giovanni Federico & Paul Sharp, 2013. "The cost of railroad regulation: the disintegration of American agricultural markets in the interwar period," Economic History Review, Economic History Society, vol. 66(4), pages 1017-1038, November.
    3. Mario J. Crucini & Gregor W. Smith, 2016. "Distance and Time Effects in Swedish Commodity Prices, 1732-1914," Working Papers 1357, Queen's University, Department of Economics.
    4. repec:bdr:bdrcap:2001-12-91-146 is not listed on IDEAS
    5. Jaramillo, Carlos Felipe & Nupia, Oskar Andrés & Romero, Carmen Astrid, 2001. "Integración en el mercado laboral colombiano : 1945-1998," Chapters,in: Meisel-Roca, Adolfo (ed.), Regiones, ciudades y crecimiento económico en Colombia, chapter 3, pages 91-146 Banco de la Republica de Colombia.
    6. Slaughter, Matthew J., 2001. "Trade liberalization and per capita income convergence: a difference-in-differences analysis," Journal of International Economics, Elsevier, vol. 55(1), pages 203-228, October.
    7. Matthew J. Slaughter, 1997. "Per Capita Income Convergence and the Role of International Trade," NBER Working Papers 5897, National Bureau of Economic Research, Inc.
    8. Matthew J. Slaughter, 1998. "International Trade and Per Capita Income Convergence: A Difference-in-Differences Analysis," NBER Working Papers 6557, National Bureau of Economic Research, Inc.
    9. Michael D. Bordo, 2004. "The United States as a Monetary Union and the Euro: A Historical Perspective," Cato Journal, Cato Journal, Cato Institute, vol. 24(1-2), pages 163-170, Spring/Su.
    10. Robert A. Margo, 1998. "Labor Market Integration Before the Civil War," NBER Working Papers 6643, National Bureau of Economic Research, Inc.
    11. Collins, William J., 1999. "Labor Mobility, Market Integration, and Wage Convergence in Late 19th Century India," Explorations in Economic History, Elsevier, vol. 36(3), pages 246-277, July.
    12. Mario J. Crucini & Gregor W. Smith, 2016. "Distance and Time Effects in Swedish Commodity Prices, 1732–1914," NBER Working Papers 22175, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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