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Local Reallocation: Lessons from Bankruptcies during Britain’s Market Integration

Author

Listed:
  • Tobias Korn

    (Leibniz Universität Hannover & Heidelberg University)

  • Jean Lacroix

    (RITM, Université Paris-Saclay & CESifo Münich)

Abstract

This paper documents a new consequence of market integration: local reallocation, i.e., the exit of some workers from production even though employment increases in the same area and industry. Thanks to new data on over 150,000 personal bankruptcies com- bined with detailed microcensus data from 19th-century Britain, we estimate the causal impact of railway access on employment growth and personal bankruptcies. Market integration increased both employment and bankruptcy probability solely in the man- ufacturing sector. Studying the mechanisms of local reallocation, we show that market integration increased the number and size of manufacturing firms that employed cheap, task-differentiated labour. Our results extend existing research focused primarily on reallocation either across sectors or across locations.

Suggested Citation

  • Tobias Korn & Jean Lacroix, 2025. "Local Reallocation: Lessons from Bankruptcies during Britain’s Market Integration," Working Papers 408, Leibniz Institut für Ost- und Südosteuropaforschung (Leibniz Institute for East and Southeast European Studies).
    • Handle: RePEc:ost:wpaper:408
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    References listed on IDEAS

    as
    1. Braun, Sebastian Till & Franke, Richard, 2022. "Railways, Growth, and Industrialization in a Developing German Economy, 1829–1910," The Journal of Economic History, Cambridge University Press, vol. 82(4), pages 1183-1221, December.
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    4. Aaron Flaaen & Justin R. Pierce, 2019. "Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector," Finance and Economics Discussion Series 2019-086, Board of Governors of the Federal Reserve System (U.S.).
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    Keywords

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    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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