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Abstract:
We examine the impacts of market integration on the development of American manufacturing, as railroads expanded through the latter half of the 19th century. Using county-by-industry data from the Census of Manufacturers, we estimate substantial impacts on manufacturing productivity growth from increases in county market access due to expansion of the railroad network. These productivity impacts are driven by increases in ``reallocative efficiency,’‘ as input usage increased in areas where value marginal product exceeded marginal cost.
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