Development of the American Economy.

• Author: Goldin, Claudia

The NBER Program on the Development of the American Economy (DAE) investigates subjects as diverse as labor and population, national and international finance, industrial organization, and political economy. Its members are linked by their dedication to understanding the process of long-run economic development and growth. '

Several years ago the DAE began a research initiative in political economy from which two conference volumes have resulted. In the most recent, The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, DAE researchers explore the impact of the 1930s on fiscal and monetary policy, regulation of banks and agriculture, fiscal federalism, union growth, social insurance, and international trade.(1) The DAE will launch a new initiative in urban economic history in Summer 1998.

This report highlights several DAE researchers whose work seeks the historical origins of current economic issues. Joseph P. Ferrie explores immigrant mobility in the 19th century, when the rate of immigrant flow was far greater than today's. Douglas A. Irwin investigate the origins of tariff policy, such as why political parties have switched positions on free trade. Naomi R. Lamoreaux and Kenneth L. Sokoloff research the process of invention beginning in the 19th century. Claudia Goldin and Lawrence F. Katz explore the expansion of U.S. education and find a strong relationship, at the state level, between educational performance today and that reported in the early 20th century. Last, Sukkoo Kim traces the origins of today's industrial regionalization and localization patterns and the role of cities in the economy.

Immigrant Flow in the 19th Century

There have been many periods of high immigration in U.S. history, but the period of greatest inflow, measured as a fraction of the existing population, occurred in the decades just before the Civil War. Ferrie asks how the new arrivals fared as they entered the U.S. economy and how their arrival altered the lives of workers already in the United States. By linking the records of more than 2,000 immigrants arriving in New York City between 1840 and 1850 to the manuscripts of the 1850 and 1860 U.S. federal population censuses, Ferrie creates a unique longitudinal dataset that assesses the immigrant experience in the New World.

Ferrie compares immigrant occupations recorded in the passenger ship records with those reported for the same individuals in subsequent U.S. censuses to determine the reasons that some groups rose in occupational status while others did not.(2) He shows that the immigrants faring best arrived with occupational skills, were literate in their native languages, and settled in rapidly growing communities with high concentrations of immigrants. By combining data from ship records about dates of arrival with wealth data from the 1850 and 1860 U.S. population censuses, Ferrie measures the change over time in the amount of property that immigrants to the United States owned.(3) He finds that real estate wealth grew roughly 10 percent for each year of residence in the United States and that immigrant occupation and location are the most important determinants of the rate of accumulation.

Ferrie collected a sample of 4,900 native-born males from the 1850 and 1860 U.S. censuses to examine how natives' wealth and occupational status changed during the 1850s, and it shows that Americans were highly mobile.(4) For example, 47 percent of American males changed their county of residence between 1850 and 1860, and unskilled workers migrated to the western frontier from urban places in the East, giving credence to an old and often discredited hypothesis that the frontier served as America's "safety valve." On the whole, Ferrie estimates that the geographical dispersion of immigrants among the general U.S. population was faster and more complete in the 1850s than in the 1970s.(5) The more rapid spatial assimilation of immigrants in the earlier period, Ferrie finds, was entirely the result of the behavior of the native population. Natives are now less likely than they were in the 1850s to move into cities with immigrant concentrations.

Ferrie's work on immigrants and natives has been brought together in Yankeys Now...