Transport and urban growth in the First Industrial Revolution

Abstract The Industrial Revolution led to dramatic economic changes that persist to the present. This paper focuses on urban areas in England and Wales, the birthplace of the First Industrial Revolution, and the role of early transport improvements, like improving rivers and roads, building canals and reducing sailing costs. We estimate how much inter-urban freight transport costs declined from all such innovations between 1680 and 1830 using a new multi-modal transport model. We find that relative to producer prices, transport costs declined by nearly 75%. We then estimate how lower trade costs led to significantly higher urban population through increased market access. Our empirical strategy addresses confounding factors and potential endogeneity. A counterfactual suggests that without any change in the ratio of transport costs to producer prices between 1680 and 1830, the population in 1841 would have been more coastal and inland towns would have been 20% to 25% smaller. In extensions, we show that levels of market access in 1830 had persistent, positive effects on urban population up to 1911. It also led to significantly higher property income, more migration and fewer unskilled occupations by the mid-nineteenth century. Broadly, early transport improvements significantly shaped the spatial structure of urban economies during the First Industrial Revolution and beyond.