Trade, Slavery, and State Coercion of Labor: Egypt During the First Globalization Era

Ample evidence indicates that labor coercion could rise during trade booms. I investigate the effects of trade when there are dual coercive institutions---slavery and state coercion---and when one system is selectively abolished. Whereas wealthy employers could purchase slaves, only the political elite could use state violence to coerce local labor. Employing novel data from Egypt, I document that the cotton boom in 1861--1865 increased imported slaveholdings among the rural middle class, and state coercion of the peasantry by the elite. Slavery abolition in 1877 did not impact state coercion, but increased the labor cost facing the rural middle class.