Working Paper: CEPR ID: DP13820
Authors: Stephan E. Maurer; Ferdinand Rauch
Abstract: This paper studies how the opening of the Panama Canal in 1914 changed market access and influenced the economic geography of the United States. We compute shipment distances with and without the canal from each US county to each other US county and to key international ports and compute the resulting change in market access. We relate this change to population changes in 20-year intervals from 1880 to 2000. We find that a 1 percent increase in market access led to a total increase of population by around 6 percent. We compute similar elasticities for wages, land values and immigration from out of state. When we decompose the effect by industry, we find that tradable (manufacturing) industries react faster than non-tradable (services), with a fairly similar aggregate effect.
Keywords: Market Access; Panama Canal; Trade Shock; Gravity
JEL Codes: F1; R1; O1; N72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Market access change (D49) | Population growth (J11) |
| Opening of the Panama Canal (N72) | Market access change (D49) |
| Market access change (D49) | Tradable manufacturing industries response (L69) |
| Market access change (D49) | Nontradable services response (H49) |
| Market access change (D49) | Wages (J31) |
| Market access change (D49) | Land values (R52) |
| Market access change (D49) | Immigration patterns (F22) |