English, Article, Journal or magazine article edition: Transportation and development: insights from the U.S., 1840-1860 Berthold Herrendorf; James A. Schmitz; Arilton Teixeira

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Bookmark: http://trove.nla.gov.au/version/28036
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Transportation and development: insights from the U.S., 1840-1860
Author
  • Berthold Herrendorf
  • James A. Schmitz
  • Arilton Teixeira
Physical Description
  • preprint
Notes
  • We study the effects of large transportation costs on economic development. We argue that the Midwest and the Northeast of the U.S. is a natural case because starting from 1840 decent data is available showing that the two regions shared key characteristics with today’s developing countries and that transportation costs were large and then came way down. To disentangle the effects of the large reduction in transportation costs from those of other changes that happened during 1840?1860, we build a model that speaks to the distribution of people across regions and across the sectors of production. We find that the large reduction in transportation costs was a quantitatively important force behind the settlement of the Midwest and the regional specialization that concentrated agriculture in the Midwest and industry in the Northeast. Moreover, we find that it led to the convergence of the regional per capita incomes measured in current regional prices and that it increased real GDP per capita. However, the increase in real GDP per capita is considerably smaller than that resulting from the productivity growth in the nontransportation sectors.
  • Transportation ; Middle West ; Developing countries
  • RePEc:fip:fedmsr:425
Language
  • English
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