Using newly constructed spatially disaggregated data for London from 1801 to 1921, researchers Stephan Heblich, Stephen J Redding and Daniel Sturm show that the invention of the steam railway led to the first large-scale separation of workplace and residence. They show that a class of quantitative urban models is remarkably successful in explaining this reorganization of economic activity. They structurally estimate one of the models in this class and find substantial agglomeration forces in both production and residence. In counterfactuals, they find that removing the whole railway network reduces the population and the value of land and buildings in London by up to 51.5% and 53.3% respectively, and decreases net commuting into the historical center of London by more than 300,000 workers.

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