Railroads, Reallocation, and the Rise of American Manufacturing / Richard Hornbeck, Martin Rotemberg.

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Hornbeck, Richard

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w26594.Publication details: Cambridge, Mass. National Bureau of Economic Research 2019.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We examine impacts of market integration on the development of American manufacturing, as railroads expanded through the latter half of the 19th century. Using new county-by-industry data from the Census of Manufactures, we estimate substantial impacts on manufacturing productivity from relative increases in county market access as railroads expanded. In particular, the railroads increased economic activity in marginally productive counties. Allowing for the presence of factor misallocation generates much larger aggregate economic gains from the railroads than previous estimates. Our estimates highlight how broadly-used infrastructure or technologies can have much larger economic impacts when there are inefficiencies in the economy.

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Previous	nber w26591 Urban Growth and its Aggregate Implications /	nber w26592 Voluntary Disclosure and Personalized Pricing /	nber w26593 An Econometric Model of International Long-run Growth Dynamics /	nber w26594 Railroads, Reallocation, and the Rise of American Manufacturing /	nber w26595 Motivated Errors /	nber w26596 Econometrics For Decision Making: Building Foundations Sketched By Haavelmo And Wald /	nber w26597 Demand for Older Workers: What Do Economists Think? What Are Firms Doing? /	Next

December 2019.

We examine impacts of market integration on the development of American manufacturing, as railroads expanded through the latter half of the 19th century. Using new county-by-industry data from the Census of Manufactures, we estimate substantial impacts on manufacturing productivity from relative increases in county market access as railroads expanded. In particular, the railroads increased economic activity in marginally productive counties. Allowing for the presence of factor misallocation generates much larger aggregate economic gains from the railroads than previous estimates. Our estimates highlight how broadly-used infrastructure or technologies can have much larger economic impacts when there are inefficiencies in the economy.