Working Paper: CEPR ID: DP13170
Authors: Stephen J. Redding; Daniel M. Sturm; Stephan Heblich
Abstract: Modern metropolitan areas involve large concentrations of economic activity and the transport of millions of people each day between their residence and workplace. We use the revolution in transport technology from the invention of steam railways, newly-constructed spatially-disaggregated data for London from 1801-1921, and a quantitative urban model to provide evidence on the role of these commuting flows in supporting such concentrations of economic activity. Steam railways dramatically reduced travel times and permitted the firstlarge-scale separation of workplace and residence. We show that our model is able to account for the observed changes in the organization ofeconomic activity, both qualitatively and quantitatively. In counterfactuals, we find that removing the entire railway network reduces the population and the value of land and buildings in Greater London by 20 percent or more, and brings down commuting into the City of London from more than 370,000 to less than 60,000 workers.
Keywords: agglomeration; urbanization; transportation
JEL Codes: O18; R12; R40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of steam railways (N73) | reduction in commuting times (R41) |
| reduction in commuting times (R41) | separation of workplace and residence (J29) |
| separation of workplace and residence (J29) | increase in population in Greater London (J11) |
| separation of workplace and residence (J29) | increase in land value in Greater London (R52) |
| introduction of steam railways (N73) | shift in organization of economic activity (F61) |
| shift in organization of economic activity (F61) | decline in population of the City of London (R23) |
| introduction of steam railways (N73) | expansion of Greater London (R12) |
| introduction of steam railways (N73) | maintenance of urban density (R38) |
| introduction of steam railways (N73) | maintenance of economic activity (E20) |
| removing the railway network (R42) | reduction in population of Greater London (R23) |
| removing the railway network (R42) | reduction in land value in Greater London (R52) |
| removing the railway network (R42) | drop in commuting into the City of London (R41) |