Locomotives of local growth: The short- and long-term impact of railroads in Sweden

This paper studies the impact of railroads on 150 years of urban growth in Sweden, identifying the short- and long-term effects of a first wave of railroad construction. Difference-in-differences and instrumental variable estimates show that towns that gained access experienced substantial relative increases in population, though such growth mainly reflected a relocation of economic activity. Over the twentieth century, we find little evidence of convergence in town populations, despite the railroad network expanding further to connect nearly all towns. Evidence on historical investments and present-day factors is consistent with the idea that the transitory shock of the first railroads gave rise to path dependence in the location of economic activity.