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

Author

Listed:
  • Jean Lacroix

    (RITM - Réseaux Innovation Territoires et Mondialisation - Université Paris-Saclay, Université Paris-Saclay)

  • Tobias Korn

    (Leibniz Universität Hannover=Leibniz University Hannover, Universität Heidelberg [Heidelberg] = Heidelberg University)

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 19 th 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

  • Jean Lacroix & Tobias Korn, 2024. "The Bankruptcy Express: Market Integration, Organizational Changes, and Financial distress in 19 th century Britain," Working Papers hal-04807764, HAL.
    • Handle: RePEc:hal:wpaper:hal-04807764
    Note: View the original document on HAL open archive server: https://hal.science/hal-04807764v1
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