Does the distribution of New Deal spending reflect an optimal provision of public goods?

Since 1969 more than a dozen studies have explored the grossly unequal state-level distribution of New Deal spending. Why did small population rural states such as Nevada, Montana, and Wyoming receive up to six times as many federal dollars per capita as densely populated states such as Connecticut, Rhode Island, and New York? Empirical studies employing economic and political variables have had mixed results in explaining this distribution. What past studies neglect is that a large proportion of New Deal dollars went towards the creation of public goods, which had spillover effects particularly upon those who lived in close proximity to these projects. This note suggests that the state-level distribution of per capita expenditures during the 1930s is consistent with what would be expected to follow from an economically efficient allocation of public goods.

Steam Power, Establishment Size, and Labor Productivity Growth in Nineteenth Century American Manufacturing

We use establishment level data from the 1850-80 censuses of manufacturing to study the correlates of the use of steam power and the impact of steam power on labor productivity growth in nineteenth century American manufacturing. A key result is that establishment size mattered: large establishments, as measured by employment, were much more likely to use steam power than smaller establishments. Controlling for firm size, location, industry, and other establishment characteristics, steam powered establishments had higher labor productivity than establishments using hand or animal power, or water power. We also find that the impact of steam on labor productivity was increasing in establishment size. The diffusion of steam power was an important factor behind the growth of labor productivity, accounting for 22 to 41 percent of that growth between 1850 and 1880, depending on establishment size.

Capital Deepening in United States Manufacturing, 1850-1880

Establishment-level data are used to study capital deepening – increases in the capital-output ratio – in U. S. manufacturing from 1850 to 1880. In both nominal and real terms, the aggregate capital-output ratio rose substantially over the period. Capital deepening is shown to be especially important in the larger firms and was associated with the diffusion of inanimate power. Although capital deepening implies a declining average product of capital, rates of return were not necessarily falling if capital’s share was increasing. However, there is strong evidence that returns did, in fact, decline.

Capital Deepening in American Manufacturing, 1850-1880

We use establishment-level data to study capital deepening -- increases in the capital-output ratio -- in American manufacturing from 1850 to 1880. In nominal terms, the aggregate capital-output ratio in our samples rose by 30 percent from 1850 to 1880. Growth in real terms was considerably greater -- 70 percent -- because prices of capital goods declined relative to output prices. Cross-sectional regressions suggest that capital deepening was especially importnat in the larger firms and was positively associated with the diffusion of steam-powered machinery. However, even after accounting for shifts over time in such factors, much of the capital deepening remains to be explained. Although capital deepening implies a fall in the average product of capital it does not necessarily imply that rates of return were declining. However, we find strong evidence that returns did decline. We also show that returns were decreasing in firm size, although the data are not sufficiently informative to tell us why it was so.

"Productivity in Manufacturing and the Length of the Working Day: Evidence from the 1880 Census of Manufactures"

Data from the manuscript census of manufacturing are used to estimate the effects of the length of the working day on output and wages. We find that the elasticity of output with respect to daily hours worked was positive but less than one--implying diminishing returns to increases in working hours. When the annual number of days worked is held constant, the average annual wage is found to be positively related to daily hours worked, but again the elasticity less than 1.0. At the modal value of daily hours (ten hours per day), it appears that from the standpoint of employers, the marginal benefits of a shorter working day (a lower wage bill) were approximately offset by the marginal cost (lower output).

"Part-Year Operation in 19th Century American Manufacturing: Evidence from the 1870 and 1880 Censuses"

Using unpublished data contained in samples from the manuscripts of the 1870 and 1880 censuses of manufactures--the earliest comprehensive estimates available--this study examines the extent and correlates of part-year manufacturing during the late 19th century. While the typical manufacturing plant operated full-time, part-year operation was not uncommon; its likelihood of this varied across industries and locations and with plant characteristics. Workers in such plants received somewhat higher monthly wages than those in firms that operated year round, compensating them somewhat for their losses and possible inconvenience.

Part-Year Operation in 19th Century American Manufacturing: Evidence from the 1870 and 1880 Censuses

Using unpublished data contained in samples from the manuscripts of the 1870 and 1880 censuses of manufactures¾the earliest comprehensive estimates available¾ this study examines the extent and correlates of part-year manufacturing during the late 19th century. While the typical manufacturing plant operated full-time, part-year operation was not uncommon; its likelihood of this varied across industries and locations and with plant characteristics. Workers in such plants received somewhat higher monthly wages than those in firms that operated year round, compensating them somewhat for their losses and possible inconvenience.

Productivity in Manufacturing and the Length of the Working Day: Evidence from the 1880 Census of Manufactures

Data from the manuscript census of manufacturing are used to estimate the effects of the length of the working day on output and wages. We find that the elasticity of output with respect to daily hours worked was positive but less than one—implying diminishing returns to increases in working hours. When the annual number of days worked is held constant, the average annual wage is found to be positively related to daily hours worked, but again the elasticity less than 1.0. At the modal value of daily hours (ten hours per day), it appears that from the standpoint of employers, the marginal benefits of a shorter working day (a lower wage bill) were approximately offset by the marginal cost (lower output).

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.

Irregular Production and Time-out-of-Work in American Manufacturing Industry in 1870 and 1880: Some Preliminary Estimates

This paper makes use of hitherto untabulated data from the censuses of manufacturing for 1870 and 1880 to investigate the extent to which firms operated at less than their full capacity year round in these census years and thus provides some evidence of the extent to which workers may have faced temporary or permanent lay-off. We conclude that firms nationwide operated for the equivalent of 254 days (out of, perhaps, 309 working days) during the 1870 census year from the end of May, 1869 to the beginning of June, 1870 and 261 days during the 1880 census year from the beginning of June 1879 to the end of May, 1880. Workers put in the equivalent of slightly more days of work in each of these years in their customary industrial employment because larger firms were more likely to operate for more days per year. There were, however, significant regional and industry differences. Although our estimates are broadly consistent with independent estimates and are generally in accord with expectations, they raise important questions about economic performance in the late nineteenth century which remain unanswered here.