Macrohistory Seminar – Gisela Rua (Board of Governors of the Federal Reserve System)

Event details

  • | Thursday, May 11
  • 12:15 PM
  • Kaiserplatz 7-9, 4th floor, Room 4.006

The Local Impact of Containerization

This paper exploits the advent of containerization, a technological shock that dramatically reduced international shipping costs, to examine how access to international markets affects local economic growth. We contend with the non-random adoption of containerization by employing a novel instrument: being near a very deep port in 1953, before containerization. Because container ships are much larger and displace more water than their predecessors, they require substantially deeper ports. Despite their value in the post-container era, very deep ports had no particular competitive advantage before the advent of containerization. Analogous to a cost shifter, port depth should affect the supply of ports, but have no effect on the demand for ports. To estimate the impact of containerization on local economic activity, we construct a county level panel dataset describing the evolution of population, employment, port facilities, and other variables in the United States from 1950 to 2010. Consistent with the predictions of a standard new economic geography model, we find substantial increases in population, employment, and wages in U.S. counties near containerized ports. Population gains are higher than the average increase in population for all counties from 1950 to 2010. Also consistent with the model, we find that containerization-induced population growth dissipates as distance to the containerized port increases. Finally, containerization-induced population growth is centered primarily in counties where land was available, not where industry was most compatible.

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