Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2021:1: The Causal Effect of Transport Infrastructure: Evidence from a New Historical Database

Erik Lindgren (), Per Pettersson-Lidbom () and Björn Tyrefors ()
Additional contact information
Erik Lindgren: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Per Pettersson-Lidbom: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Björn Tyrefors: Research Institute of Industrial Economics (IFN) and Department of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

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

JEL-codes: H54; L92; N73; O22; R12; R42

25 pages, First version: March 8, 2021. Revised: May 28, 2021.

Full text files

wp21_01_1.pdf PDF-file Full text

Download statistics

Questions (including download problems) about the papers in this series should be directed to Anne Jensen ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2021-06-03 09:56:38.