Nber Working Paper Series Did Railroads Induce or Follow Economic Growth? Urbanization and Population Growth in the American Midwest, 1850-60

For generations of scholars and observers, the "transportation revolution," especially the railroad, has loomed large as a dominant factor in the settlement and development of the United States in the nineteenth century. There has, however, been considerable debate as to whether transportation improvements led economic development or simply followed. Using a newly developed GIS transportation database we examine this issue in the context of the American Midwest, focusing on two indicators of broader economic change, population density and the fraction of population living in urban areas. Our difference in differences estimates (supported by IV robustness checks) strongly suggest that the coming of the railroad had little or no impact upon population densities just as Albert Fishlow concluded some 40 years ago. BUT, our results also imply that the railroad was the "cause" of midwestern urbanization, accounting for more than half of the increase in the fraction of population living in urban areas during the 1850s. Jeremy Atack Department of Economics Vanderbilt University VU Station B #351819 2301 Vanderbilt Place Nashville, TN 37235-1819 and NBER [email protected] Fred Bateman Department of Economics Brooks Hall University of Georgia Athens, GA 30602-6254 [email protected] Michael Haines Department of Economics, 217 Persson Hall Colgate University 13 Oak Drive Hamilton, NY 13346 and NBER [email protected] Robert A. Margo Department of Economics Boston University 270 Bay State Road Boston, MA 02215 and NBER [email protected]