This paper studies how the opening of the Panama Canal in 1914 changed counties? market potential and influenced the economic geography of the USA. We compute shipment effective distances with and without the canal from each US county to each other US county and to international ports and compute the resulting change in market potential. The main elasticity would imply that a 1% increase in market potential led to a total increase of population by around 2.3% in 1940. We compute similar elasticities for wages, land values, and immigration from out of state. Tradable (manufacturing) industries react stronger than non-tradable (services) industries.

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25 March 2022

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Oxford Economic Papers 75(1) , pp.142 - 162, 2022

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DOI: 10.1093/oep/gpac009

https://academic.oup.com/oep/advance-article/doi/10.1093/oep/gpac009/6554037?searchresult=1

This Journal article is published under the centre's Urban programme.