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The Causal Effect of Transport Infrastructure: Evidence from a New Historical Database

Erik Lindgren (), Per Pettersson-Lidbom () and Björn Tyrefors
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Erik Lindgren: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

No 2021:1, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: In this paper, we analyze the effect of transport infrastructure investments in railways on three measures of local economic activity: real nonagricultural income, agricultural land values and population size. As a testing ground, we use data from a new historical database that includes annual panel data on approximately 2,400 regions, i.e., local governments, during the period 1860-1917. We use a staggered event study design that is robust to treatment effect heterogeneity. Importantly, we find extremely large reduced-form effects of having access to railways. For real nonagricultural income, the cumulative treatment effect is approximately 120% after 30 years. Therefore, this effect is 20 times larger than most reduced-form effects found in previous works on the effect of transport infrastructure on economic activity. Equally important, we also show that our reduced-form effect reflects growth rather than a reorganization of existing economic activity.

Keywords: railways; transport infrastructure; real income; land value; event study; treatment heterogeneity (search for similar items in EconPapers)
JEL-codes: H54 L92 N73 O22 R12 R42 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2021-03-08, Revised 2021-05-28
New Economics Papers: this item is included in nep-dev, nep-his, nep-tre and nep-ure
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Related works:
Working Paper: The Causal Effect of Transport Infrastructure: Evidence from a New Historical Database (2021) Downloads
Working Paper: The Causal Effect of Transport Infrastructure: Evidence from a New Historical Database (2021) Downloads
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