Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243169 
Year of Publication: 
2021
Series/Report no.: 
IWH-CompNet Discussion Papers No. 4/2021
Publisher: 
Leibniz-Institut für Wirtschaftsforschung Halle (IWH), Halle (Saale)
Abstract: 
This paper studies the economic and political effects of a large trade shock in agriculture - the grain invasion from the Americas - in Prussia during the first globalisation (1871-1913). We show that this shock accelerated the structural change in the Prussian economy through migration of workers to booming cities. In contrast to studies using today's data, we do not observe declining per capita income and political polarisation in counties affected by foreign competition. Our results suggest that the negative and persistent effects of trade shocks we see today are not a universal feature of globalisation, but depend on labour mobility. For our analysis, we digitise data from Prussian industrial and agricultural censuses on the county level and combine it with national trade data at the product level. We exploit the cross-regional variation in cultivated crops within Prussia and instrument with Italian trade data to isolate exogenous variation.
Subjects: 
agriculture
elections
Germany
globalisation
import competition
labour market
migration
Prussia
trade shock
JEL: 
F14
F16
F66
F68
N13
R12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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