Description

We explore how railroads affected population growth during the First Globalization (1865-1920) in Chile. We look at areas with strong comparative advantage in agriculture using novel data documenting sixty years of railroad construction. Using instrumental variables, we present four main findings. First, railroads increased both urban and rural population growth. Second, the impact was stronger in areas with more potential for agricultural expansion. Third, railroads increased specialization in agriculture when combined with a high level of the real exchange rate. And fourth, railroads had little effects on human capital and fertility. These results suggest that the effects of transportation technologies depend on existing macroeconomic conditions.