Temporary Shocks and Persistent Effects in Urban Economies: Evidence from British Cities after the U.S. Civil War

PWP-CCPR-2016-017

Abstract

Can a temporary economic shock to an important local industry influence long-run city population? To answer this question I study the large temporary shock to British cities caused by the U.S. Civil War (1861-1865), which reduced cotton supplies to Britain’s important cotton textile industry. I show that this event temporarily reduced the growth rate of cities specialized in cotton textile production, relative to other English cities, and led to a persistent change the trajectory of city population growth.