Abstract: Legacies of the Past: The Long-Term Effects of Internal Tariffs on Industry in France
This paper investigates the formation and persistent economic effects of internal tariff boundaries in France. I use the census of industry conducted during the July Monarchy (1830-1848) to investigate whether the internal tariff boundary created during the Old Regime known as the <em>Cinq Grosses Fermes</em> (CGF) had persistent effects on firm performance and location. Assuming each firm was close to the capital of the arrondissement in which it was located, I investigate whether manufacturers on either side of the CGF border differed in terms of productivity, capital per worker, and size. I find firms just outside the CGF border were larger and more productive. I follow up these results by looking in greater detail at what determined the location of the CGF border. I use data on french comprehension from the 1864 survey of language conducted by then education minister Victor Duruy to show that the borders of the CGF are explained remarkably well by linguistic fractionalization. I interpret this as strong evidence that ethno-linguistic heterogeneity in France served as a barrier to the diffusion of production technology in Old Regime France indirectly through its effect on internal political boundaries.