We inquire into the effects of infrastructure spending and road construction on the development of the manufacturing sector during the Great Depression.
We use a novel dataset on road construction and manufacturing firms between 1930 and 1940. We distinguish between local effects, measured with the change in road mileage by county, and global effects, measured with the change in market access to all other counties through the road network. We also distinguish between the whole manufacturing sector and the least tradable industries. We find that global market access is correlated with an expansion of manufacturing (increase in number of firms, firm size, firm output, and a decrease in average labor productivity) for the whole manufacturing sector and not for the least tradable industries. We also find that the change in local market access has no correlation with manufacturing outcomes, either all of manufacturing or the least tradable industries.
The Effect of Infrastructure Investment in a Low-Growth Environment: Evidence from the Great Depression
The Effect of Infrastructure Investment in a Low-Growth Environment: Evidence from the Great Depression, Miguel Morin and Scott N. Swisher IV (2017)
We inquire into the effects of infrastructure spending and road construction on the development of the manufacturing sector during the Great Depression. We use a novel dataset on road construction and manufacturing firms between 1930 and 1940. We distinguish between local effects, measured with the change in road mileage by county, and global effects, measured with the change in market access to all other counties through the road network. We also distinguish between the whole manufacturing sector and the least tradable industries. We find that global market access is correlated with an expansion of manufacturing (increase in number of firms, firm size, firm output, and a decrease in average labor productivity) for the whole manufacturing sector and not for the least tradable industries. We also find that the change in local market access has no correlation with manufacturing outcomes, either all of manufacturing or the least tradable industries.
