Railroads and Micro-regional Growth in Prussia

We study the effect of railroad access on urban population growth. Using GIS techniques,we match triennial population data for roughly 1000 cities in nineteenth-century Prussiato georeferenced maps of the German railroad network. We find positive short- andlong-term effects of having a station on urban growth for different periods during1840–1871. Causal effects of (potentially endogenous) railroad access on city growthare identified using instrumental variable and fixed-effects estimation techniques. Ourinstrument identifies exogenous variation in railroad access by constructing straight-linecorridors between terminal stations. Counterfactual models using pre-railroad growthyield no evidence in support of the hypothesis that railroads appeared as a consequenceof a previous growth spurt.