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The Bankruptcy Express: Market Integration, Organizational Changes, and Financial distress in 19th century Britain

Author

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  • Korn, Tobias
  • Lacroix, Jean

Abstract

This paper shows that amid aggregate gains, market integration generates within sector reallocation. To measure this effect, we collected new data on personal bankruptcies during the rail expansion in 19th century Britain. Our estimators leverage within geography-time and within sector-time variation to measure sector-specific effects of the rail on both employment and bankruptcies. A connection to railway increased bankruptcies only in the manufacturing sector, despite simultaneously increasing employment in that sector. Both a three-way fixed effects and a Least Cost Path approach validate the causality of our estimates. We further show that organizational changes that occurred in the manufacturing sector upon market integration explain our results: Firms expanded, self-employment decreased, occupations diversified; overall, the nature of labour changed. This biased growth of the manufacturing sector caused financial distress for some of its workers.

Suggested Citation

  • Korn, Tobias & Lacroix, Jean, 2024. "The Bankruptcy Express: Market Integration, Organizational Changes, and Financial distress in 19th century Britain," Hannover Economic Papers (HEP) dp-731, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    • Handle: RePEc:han:dpaper:dp-731
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    More about this item

    Keywords

    Bankruptcies; Economic Growth; Structural transformation;
    All these keywords.

    JEL classification:

    • N63 - Economic History - - Manufacturing and Construction - - - Europe: Pre-1913
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law

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