The U.S. as a
Coastal Nation
By Jordan Rappaport and Jeffrey Sachs
November 2001
RWP 01-11
Research Division
Federal Reserve Bank of Kansas City
Abstract
U.S. economic activity is overwhelmingly concentrated at its ocean and Great Lakes coasts. Economic theory suggests four possible explanations: a present-day productivity effect, a present-day quality-of-life effect, delayed adjustment following a historical productivity or quality-of-life effect, and an agglomeration effect following a historical productivity or quality-of-life effect. Controlling for correlated natural attributes such as the weather and including proximity measures which a priori do not influence quality-of-life, linear regressions suggest that the high coastal concentration of economic activity is primarily due to a productivity effect. Extensively controlling for historical economic density suggests that such a productivity effect continues to be operative today..
Keywords: Economic Growth, Population Density, Productivity, Quality of Life
JEL Codes: O40, O51, R11, R12
Jordan Rappaport is an economist at the Federal Reserve Bank of Kansas City. Jeffrey D. Sachs is Director of the Center for International Development at Harvard University and Galen L. Stone Professor of International Trade at Harvard University. The authors would like to thank Patty Beeson, Jerry Carlino, David Cutler, David DeJong, Claudia Goldin, Edward Glaeser, and seminar participants at Emory University, the University of Pittsburgh, the Federal Reserve Bank of Philadelphia, the 2000 Federal Reserve System Regional Conference, the 2001 Missouri Economics Conference, and the 2001 NBER Summer Workshop. Thanks also go to Michael Haines for sharing historical census data. A number of individuals have provided excellent research assistance including Nathaniel Baum Snow, Scott Benolkin, Anne Berry, Krista Jacobs, Jason Martinek, Peter Northrup, Chris Yenkey, and Andrea Zanter. The views expressed herein are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of Kansas City or the Federal Reserve System. Comments are warmly appreciated.
jordan.m.rappaport@kc.frb.org