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Working paper

National Borders and Urban Growth: Evidence from the Annexation of Alsace and Lorraine", Series: Economics

According to the Treaty of Frankfurt (1871) France lost Alsace and Lorraine. In the paper I estimate how the new border affected a growth of nearby towns. Applying difference-in-differences methodology to census data for 1831-1911, I obtain paradoxical result. The new border boosted the growth of nearby towns. Extra urban growth in a 70 km border region reached 4.23 per cent p.a. in 1872-6, and was smaller, but still significantly positive, later. Point estimate of the total border effect in 1872-1911 is 134 per cent. This effect survives in more homogeneous subsamples and is robust to a number of specification changes. Both immigration of Alsatians, garrison growth and fort construction have sizable and significant positive effect on urban growth; however, the border effect remains significantly positive after accounting for these factors.