Agglomeration Externalities and Productivity Growth: U.S. Cities in the Railroad Era, 1880-1930

Alexander Klein and Nicholas Crafts
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Alexander Klein: University of Kent

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: We investigate the role of industrial structure in labor productivity growth in U.S. cities during the ‘second industrial revolution’. We find that greater specialization was associated with faster productivity growth but that diversity only had positive effects in large cities. We interpret our results as demonstrating the existence of dynamic Marshallian externalities. Industrial specialization increased considerably in U.S. cities at this time, partly because of improved transportation which brought additional gains in labor productivity. Although this would augment the social savings from railroads, the magnitude is too small to undermine Robert Fogel’s claim that his estimate is an upper bound.

Keywords: agglomeration externalities; industrial structure; manufacturing productivity; social savings JEL Classification: N91; N92; O18; R12 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-eff, nep-geo, nep-his and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:235

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