Working Paper: NBER ID: w25047
Authors: Stephan Heblich; Stephen J. Redding; Daniel M. Sturm
Abstract: Using newly-constructed spatially-disaggregated data for London from 1801-1921, we show that the invention of the steam railway led to the first large-scale separation of workplace and residence. We show that a class of quantitative urban models is remarkably successful in explaining this reorganization of economic activity. We structurally estimate one of the models within this class and find substantial agglomeration forces in both production and residence. In counterfactuals, we find that removing the entire railway network reduces the population and the value of land and buildings in London by up to 51.5 and 53.3 percent respectively, and decreases net commuting into the historical center of London by more than 300,000 workers.
Keywords: Urban Economics; Transport Infrastructure; Commuting Patterns; Agglomeration Forces
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 |
|---|---|
| removal of railway network (R42) | population of Greater London (R23) |
| removal of railway network (R42) | value of land and buildings (R33) |
| steam railway (L92) | separation of workplace and residence (J29) |
| separation of workplace and residence (J29) | decline in nighttime population of central London (R23) |
| steam railway (L92) | increase in daytime population of central London (R23) |
| steam railway (L92) | commuting into historical center (N93) |