Working Paper: NBER ID: w10886
Authors: William Hutchinson; Robert A. Margo
Abstract: The Civil War resulted in a substantial divergence in the regional structure of factor prices. In particular, wages fell in the South relative to the non-South, but interest rates and other measures of the costs of capital increased. Using archival data for manufacturing establishments, we show that capital-output and capital-labor ratios in southern manufacturing declined relative to non-southern manufacturing after the War, precisely in the direction implied by the regional shifts in factor prices. Labor productivity in Southern manufacturing also declined, but this decline is explained by the reduction in capital intensity.
Keywords: No keywords provided
JEL Codes: N61; N91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Civil War (H56) | shifts in regional factor prices (wages fall, interest rates rise) (F16) |
| shifts in regional factor prices (wages fall, interest rates rise) (F16) | decline in capital-output and capital-labor ratios in southern manufacturing (E25) |
| Civil War (H56) | decline in capital-output and capital-labor ratios in southern manufacturing (E25) |
| decline in capital-output and capital-labor ratios in southern manufacturing (E25) | decline in labor productivity in southern manufacturing (J24) |
| decline in capital-output and capital-labor ratios in southern manufacturing (E25) | decline in per capita income in the South (E25) |