Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307745 
Year of Publication: 
2024
Series/Report no.: 
Hannover Economic Papers (HEP) No. 731
Publisher: 
Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät, Hannover
Abstract: 
This paper shows that amid aggregate gains, market integration generates withinsector 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.
Subjects: 
Bankruptcies
Economic Growth
Structural transformation
JEL: 
N63
L16
O33
R40
K35
Document Type: 
Working Paper

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