Did Tariffs Make American Manufacturing Great? New Evidence from the Gilded Age

Alexander Klein and Christopher Meissner
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Alexander Klein: University of Sussex, CEPR and CAGE

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

Abstract: We study the relationship between tariffs and labor productivity in US manufacturing between 1870 and 1909. Using highly disaggregated tariff data, state-industry data for the manufacturing sector, and a novel identification strategy, results show that tariffs reduced labor productivity. Tariffs also generally reduced the average size of establishments within an industry but raised output prices, value-added, gross output, employment, and the number of establishments. We also find evidence of heterogeneity in the association between tariffs and value added, gross output, employment, and establishments across groups of industries. We conclude that tariffs may have reduced labor productivity in manufacturing by weakening import competition and by inducing entry of smaller, less productive domestic firms. Our research also reveals that lobbying by powerful and productive industries may have been at play. The era’s high tariffs are unlikely to have helped the US become a globally competitive manufacturer.

Keywords: JEL Classification: F13; F15; N11; O14; O47 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Working Paper: Did Tariffs Make American Manufacturing Great? New Evidence from the Gilded Age (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:729

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