TY  - JOUR
AU  - Slaughter,Matthew J.
TI  - The Antebellum Transportation Revolution and Factor-Price Convergence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5303
PY  - 1995
Y2  - October 1995
UR  - http://www.nber.org/papers/w5303
L1  - http://www.nber.org/papers/w5303.pdf
N1  - Author contact info:
Matthew J. Slaughter
Tuck School of Business
Dartmouth College
100 Tuck Hall
Hanover, NH 03755
Tel: 603/646-2939
Fax: 603/646-0995
E-Mail: matthew.j.slaughter@dartmouth.edu
AB  - In antebellum America an extensive network of canals and railroads was constructed which slashed transportation costs across regions.  This 'transportation revolution' presents an interesting case study of the factor-price convergence (FPC) theorem.  In this paper I look for integration of regional labor markets driven by FPC by studying the extent to which commodity prices and factor prices converged across regions between 1820 and 1860.  My primary result is that I find very little evidence of antebellum FPC across regions.  I do find that commodity prices equalized quite markedly.  But I also find that nominal labor prices equalized very little, if at all. Given this result, I go on to discuss two aspects of the antebellum economy which very likely helped prevent FPC: differences across regions in endowments and technology.  This finding underscores that the FPC theorem does not have unambiguous empirical predictions.  How commodity prices feed into factor prices depends crucially on parameters such as endowments and technology.
ER  -