We investigate the contribution of automobile adoption to state-level real income in the United States using hand-collected historical data of the early twentieth century when the adoption was remarkably rapid. To achieve identification, we construct a Bartik-type instrumental variable for automobile adoption. We find an elasticity of income with respect to automobile adoption between 0.5 and 1. Furthermore, we reveal that the elasticity is significantly larger in high-income and automobile producing states.
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Cheng, D., Trebino, A. Early twentieth century American exceptionalism on wheels: the role of rapid automobile adoption in economic development. Lett Spat Resour Sci 14, 211–221 (2021). https://doi.org/10.1007/s12076-021-00273-6