559/2021 James Fenske, Namrata Kala and Jinlin Wei
Using a new dataset on city populations in colonial India, we show that the railroad network increased city size in the period 1881 to 1931. Our baseline estimation approach includes fixed effects for city and year, and we construct instrumental variables for railroad proximity based on distance from a least cost path spanning cities that existed prior to the start of railroad construction. Cities that increased market access due to the railroad grew, particularly those cities that were initially small and isolated.
Journal of Development Economics