The Bankruptcy Express: Market Integration and Labor Reallocation in Industrializing Britain – Tobias Korn

Sprecher

Tobias Korn (Leibniz Universität Hannover)

Abstract

Previous research has emphasized the virtues of transport infrastructure to fuel growth. This paper puts these results in perspective by focusing on potential losers of market integration: individual bankrupts during the expansion of the rail in 19th century Britain. Using a granular dataset at the sector-geography-time level, we leverage a within-geography, sector-specific exposure to railways. A connection to railways increased bankruptcies only in the manufacturing sector. Both a diff-in-diff and an IV strategy validate the causality of our estimate. We further show that our results can be explained as the manufacturing sector underwent a massive reorganization to exploit the economies of scale offered by market integration. Firms became larger; self-employment decreased; overall, the nature of labour changed. Because of this biased growth of manufacturing, some of its workers experienced financial distress.

Autoren

Tobias Korn (Lebniz Universität Hannover) – Jean Lacroix (Paris-Saclay)

Raum

Lecture Hall (A-032)