Can Kings Create Towns that Thrive? The long-term implications of new town foundations

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Abstract

We examine the long-term effects of a series of Swedish towns founded by the Crown during the early modern period. Their advantage over rural parishes consisted in having monopoly rights to trade with the local hinterland. Since the optimum sites were occupied by medieval towns, the Crown could only aim for second-rate locations. Using difference-in-difference combined with Propensity Score Matching, we find that a reduction in the distance to town increased gross production and population up to 30-40 km away. However, there is no evidence of increasing per capita production or yields. These natural constraints could only support a sluggish growth in the towns themselves. However, after the Industrial Revolution, the towns began to thrive. We argue that town status signalled the commitment of the Crown to nurture these locations creating positive expectations despite their natural constraints. During industrialization, agglomeration economies led them to become significantly large urban areas persistent until today.

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Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economic History

Keywords

  • place-based policies, path dependency, urbanization, agricultural surplus
Original languageEnglish
Pages (from-to)50-69
JournalJournal of Urban Economics
Volume112
Early online date2019 Jun 4
Publication statusPublished - 2019
Publication categoryResearch
Peer-reviewedYes

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