Trade shocks, labour markets and elections in the first globalisation

Richard Bräuer, Wolf-Fabian Hungerland and Felix Kersting

No 4/2021, IWH-CompNet Discussion Papers from Halle Institute for Economic Research (IWH)

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.

Keywords: agriculture; elections; Germany; globalisation; import competition; labour market; migration; Prussia; trade shock (search for similar items in EconPapers)
JEL-codes: F14 F16 F66 F68 N13 R12 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-his, nep-int, nep-lab, nep-mig and nep-pol
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https://www.econstor.eu/bitstream/10419/243169/1/1773168118.pdf (application/pdf)

Related works:
Working Paper: Trade Shocks, Labor Markets and Elections in the First Globalization (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhcom:42021

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