DID RAILROADS INDUCE OR FOLLOW ECONOMIC GROWTH? URBANIZATION
AND POPULATION GROWTH IN THE AMERICAN MIDWEST, 1850-60

Jeremy Atack
Fred Bateman
Michael Haines
Robert A. Margo

ABSTRACT
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.