Working Paper: NBER ID: w14410
Authors: Jeremy Atack; Michael R. Haines; Robert A. Margo
Abstract: Over the course of the nineteenth century manufacturing in the United States shifted from artisan shop to factory production. At the same time United States experienced a "transportation revolution", a key component of which was the building of extensive railroad network. Using a newly created data set of manufacturing establishments linked to county level data on rail access from 1850-70, we ask whether the coming of the railroad increased establishment size in manufacturing. Difference-in-difference and instrument variable estimates suggest that the railroad had a positive effect on factory status. In other words, Adam Smith was right -- the division of labor in nineteenth century American manufacturing was limited by the extent of the market.
Keywords: railroads; factory production; transportation revolution
JEL Codes: N61; N71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| IV (straight lines) (C26) | Rail access (L92) |
| Rail access (L92) | Factory status (L69) |
| Rail access (L92) | Establishment size (L25) |
| Rail access (L92) | Increase in manufacturing establishments classified as factories (L60) |