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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.

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  • 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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    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 Paper 1357, Economics Department, Queen's University.
    4. Mario J. Crucini & Gregor W. Smith, 2014. "Geographic Barriers to Commodity Price Integration: Evidence from US Cities and Swedish Towns, 1732 - 1860," CAMA Working Papers 2014-75, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    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. Taylor, Alan M., 1999. "Sources of convergence in the late nineteenth century," European Economic Review, Elsevier, vol. 43(9), pages 1621-1645, October.
    7. Wolfgang Keller & Carol H. Shiue & Xin Wang, 2020. "Capital markets and grain prices: assessing the storage cost approach," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(2), pages 367-396, May.
    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. Robert A. Margo, 1998. "Labor Market Integration Before the Civil War," NBER Working Papers 6643, National Bureau of Economic Research, Inc.
    10. Awaworyi-Churchill, Sefa & Inekwe, John & Ivanovski, Kris & Smyth, Russell, 2022. "Breaks, trends and correlations in commodity prices in the very long-run," Energy Economics, Elsevier, vol. 108(C).
    11. 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.
    12. Matthew J. Slaughter, 1997. "Per Capita Income Convergence and the Role of International Trade," NBER Working Papers 5897, National Bureau of Economic Research, Inc.
    13. 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.
    14. 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.

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    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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