An empirical assessment of the railroads' contribution to 19th century American economic growth is central to understanding the United States' historical rise to global economic prominence. Railroads and internal market integration may have been a major contributing factor to American economic growth; if not, isolating the limited impact of railroads enables research to explore alternative explanations. This project revisits the historical impact of railroads on American economic growth, using a new methodology that combines recent advances in general equilibrium trade theory, county-level historical data, and the construction of a new spatial network of freight transportation routes. Railroads spread throughout the United States from 1830 to 1920, both complementing and substituting for the use of navigable waterways. This historical setting provides an opportunity to implement and test recent theoretical advances in trade theory using a direct shock to trade costs and county-level data on population and agricultural land values. The aggregate economic impact of changes in counties' access to markets is capitalized by changes in counties' land values. The empirical analysis uses changes in the railway network to estimate the relationship between counties' market access and land values. These estimates are used to calculate the implied aggregate economic loss from removing railroads or replacing railroads with a hypothetical extension of the canal network. Further analysis considers railroads' impact on the geographic distribution of economic activity. An understanding of historical American economic growth is shaped by the impact of railroads and, more generally, the impacts of market integration. When analyzing other determinants of American economic growth, the created datasets provide an opportunity to adjust for concurrent railroad construction and changes in counties' market access. Globally, many growth initiatives focus on improving transportation infrastructure and market integration. This project develops and illustrates a new methodology for estimating the impacts of transportation infrastructure improvements and increased market integration.
