Structural change in the U.S. economy: 1850–1900

Structural change models are potentially ideal for abstracting from a “watershed” event like the U.S. Civil War, in that they seek to explain the transformation of economies from agricultural to industrial on the basis of labor movement and incentives rather than on technical changes. We define the Civil War as a regime shift that necessitated a structural movement of labor from Southern agriculture to Northern manufacturing, and design empirical tests to determine whether this formulation fits the empirical data better than theories, such as the Beard–Hacker thesis, that characterize the U.S. transformation as an abrupt adjustment to technical shocks. We conclude that the data indicate just such a structural movement.