Temporary Shocks and Persistent Effects in the Urban System: Evidence from British Cities after the U.S. Civil War / W. Walker Hanlon.

Format:

Book

Author/Creator:

Hanlon, W. Walker.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20471.

NBER working paper series no. w20471

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Temporary Shocks and Persistent Effects in the Urban System

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

Urban economies are often heavily reliant on a small number of dominant industries, leaving them vulnerable to negative industry-specific shocks. This paper analyzes the long-run impacts of one such event: the large, temporary, and industry-specific shock to the British cotton textile industry caused by the U.S. Civil War (1861-1865), which dramatically reduced supplies of raw cotton. Because the British cotton textile industry was heavily concentrated in towns in Northwest England, I compare patterns in these cotton towns to other English cities. I find that the shock had a persistent negative effect on the level of city population lasting at least 35 years with no sign of diminishing. Decomposing the effect by industry, I show that the shock to cotton textiles was transmitted to other local firms, leading to increased bankruptcies and long-run reductions in employment. This transmission occurred primarily through the link to capital suppliers, such as machinery and metal-goods producers. Roughly half of the reduction in city-level employment growth was due to the impact on industries other than cotton textiles.

Notes:

Print version record

September 2014.