Reading: Alexander Klein and Nicholas Crafts (2015): Agglomeration Economics and Productivity Growth, U.S. Cities, 1880-1930
Alexander Klein and Nicholas Crafts (2015): Agglomeration Economics and Productivity Growth, U.S. Cities, 1880-1930 <https://ideas.repec.org/p/cge/wacage/235.html>
If commodities are fully rival and excludible—i.e., the resources devoted to the production of one unit are thereby used up, and cannot be used to aid in the production of a second unit; and if sellers can easily prevent non-buyers from benefiting from what they produce (and non-buyers can easily prevent sellers from imposing costs on them—then, if the distribution of wealth accords with desert and utility, the competitive market economy in equilibrium does the job.
But how often is production really constant returns to scale? And how often are spillovers truly absent? And where and when are markets thick enough to actually be in any form of “competitive equilibrium”? Please reflect on these and related issues in the context of this week's readings.
Four Things Going on…:
- Path Dependence
- Lock-In
- Thick Markets
- Division of Labor
Five Orienting Questions:
- What are “Marshallian” and “Jacobian” externalities?
- How much of American growth over 1880-1930 can we attribute to urban agglomeration?
- “Greater specialization correlated with faster productivity growth in a city’s industrial core”—causation?
- Diversity bad for small cities and good for large cities—causation?
- How much purchase does Klein and Crafts’s story have on British—and European—retardation during the Second Industrial Revolution starting in 1870?
Thick Markets: Klein and Crafts: ABSTRACT:
We investigate the role of industrial structure in labor productivity growth in U.S. cities between 1880 and 1930 using a new dataset constructed from the Census of Manufactures.
We find that increases in specialization were associated with faster productivity growth but that diversity only had positive effects on productivity performance in large cities.
We interpret our results as providing strong support for the importance of Marshallian externalities.
Industrial specialization increased considerably in U.S. cities in the early 20th century, probably as a result of improved transportation, and we estimate that this resulted in significant gains in labor productivity.
What Information Do We Have?
- What historical stories do we tell?
- Industrial structure and labor productivity growth in U.S. cities 1880-1930
- Census of Manufactures
- Cities:
- 1890: New York, Chicago, Philadelphia, Brooklyn, St. Louis, Boston, Baltimore, San Francisco, Cincinnati, Cleveland
- 1920: New York (incl. Brooklyn), Chicago, Philadelphia, Detroit, Cleveland, St. Louis, Boston, Baltimore, Pittsburg, Los Angeles
American Labor Productivity and Specialization?
- We find that increases in specialization were associated with faster productivity growth
- We interpret our results as providing strong support for the importance of Marshallian externalities.
- Industrial specialization increased considerably in U.S. cities in the early 20th century
- Probably as a result of improved transportation
- We estimate that this resulted in significant gains in labor productivity
- Directions of causation here?
- Are there plausible instruments anywhere?
- How do we tell a story about what causes a city to become specialized/not specialized?
American Labor Productivity and Diversity?
- Diversity only had positive effects on productivity performance in large cities
- Does it?
- Directions of causation here?
- Are there plausible instruments anywhere? How do we tell a story about what causes a city to become diverse/not diverse?
key: https://www.icloud.com/keynote/0TRKbOOu32Fd-08v_1FW63MvQ#2017-02-22_Econ_210a_Urban_Economics_.IEH
