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Title: The Economics of Speed: The Electrification of the Streetcar System and the Decline of Mom-and-Pop Stores in Boston, 1885-1905

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: Small family firms dominated the American economy in the nineteenth century, and still dominate in many developing economies today. A long-conjectured cause of this phenomenon, represented by Chandler (1977), is that a lack of technological capability to move goods and people precludes the emergence of modern firms. This paper provides the first causal evidence in support of this hypothesis, exploiting the natural experiment that Boston quickly electrified its previous horse-drawn streetcar system between 1889 and 1896 while keeping the preexisting transit routes almost unchanged. The inference comes from comparing changes in firm size in rail-connected locations to changes in neighboring unconnected locations. Analyzing new data transcribed from Boston business records from 1885 to 1905, I find that rail-connected locations experienced a 5.3-percentage point relative drop in the share of sole proprietorship establishments after the streetcar electrification.

Url: http://econweb.ucsd.edu/~wyou/pdfs/WeiYouJMP.pdf

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Authors: You, Wei

Publisher: University of California, San Diego

Data Collections: IPUMS USA

Topics: Other

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