673/2023 Giulio Cainelli, Carlo Ciccarelli, Roberto Ganau
We study how changes in the administrative hierarchy of a country affect development at the city level. We exploit the 1806 Napoleonic administrative reform implemented in the Kingdom of Naples as a historical experiment to assess whether district capitals endowed with supra-municipal administrative functions by law gained an urban development premium compared with non-capital cities. We assemble an original dataset combining historical data from 1648 to 1911, and rely on difference-in-differences and instrumental variable estimation strategies. We find that district capitals recorded a time-persistent population growth premium in the period 1828–1911, and experienced higher industrialization both before and after the Italian unification occurred in 1861, compared with non-capital cities. We explain our results through mechanisms related to public goods provision and transport network accessibility.