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Closing Time: The Local Equilibrium Effects of Prohibition

Greg Howard and Arianna Ornaghi
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Arianna Ornaghi: University of Warwick

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: How do different local policies in a federal system affect local land values, production, and sorting? We study the question exploiting a large historical policy change : U.S. Alcohol Prohibition in the early twentieth century. Comparing same-state early and late adopters of county dry laws in a difference-in-differences design, we find that early Prohibition adoption increased population and farm real estate values. Moreover, we find strong effects on farm productivity consistent with increased investment due to a land price channel. In equilibrium, the policy change disproportionately attracted immigrants and African-Americans.

Keywords: Tiebout sorting; migration; land values; productivity; amenities; credit JEL Classification: N91; R13; E22 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-agr, nep-geo, nep-his and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1347

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