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

Author

Listed:
  • Tobias Korn
  • Jean Lacroix

Abstract

This paper shows that amid aggregate gains, market integration generates within- sector reallocation. To measure this effect, we collected new data on personal bankrupt- cies 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 em- ployment 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

  • Tobias Korn & Jean Lacroix, 2024. "The Bankruptcy Express: Market Integration, Organizational Changes, and Financial distress in 19th century Britain," Working Papers CEB 24-016, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:2013/385126
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    References listed on IDEAS

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    1. Dave Donaldson & Richard Hornbeck, 2016. "Railroads and American Economic Growth: A "Market Access" Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 799-858.
    2. Nicholas Crafts, 2022. "Slow real wage growth during the Industrial Revolution: productivity paradox or pro-rich growth? [Engels’ pause: technical change, capital accumulation, and inequality in the British industrial revolution]," Oxford Economic Papers, Oxford University Press, vol. 74(1), pages 1-13.
    3. Stephan Heblich & Stephen J. Redding & Yanos Zylberberg, 2024. "The Distributional Consequences of Trade: Evidence from the Grain Invasion," NBER Working Papers 32958, National Bureau of Economic Research, Inc.
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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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