Local Reallocation: Lessons from Bankruptcies during Britain’s Market Integration

Tobias Korn and Jean Lacroix ()
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Tobias Korn: Leibniz Universität Hannover & Heidelberg University
Jean Lacroix: RITM, Université Paris-Saclay & CESifo Münich

No 408, Working Papers from Leibniz Institut für Ost- und Südosteuropaforschung (Leibniz Institute for East and Southeast European Studies)

Abstract: Abstract This paper documents a new consequence of market integration: local reallocation, i.e., the exit of some workers from production even though employment increases in the same area and industry. Thanks to new data on over 150,000 personal bankruptcies com- bined with detailed microcensus data from 19th-century Britain, we estimate the causal impact of railway access on employment growth and personal bankruptcies. Market integration increased both employment and bankruptcy probability solely in the man- ufacturing sector. Studying the mechanisms of local reallocation, we show that market integration increased the number and size of manufacturing firms that employed cheap, task-differentiated labour. Our results extend existing research focused primarily on reallocation either across sectors or across locations.

Keywords: Bankruptcies; Market Integration; Reallocation; Structural Transformation (search for similar items in EconPapers)
JEL-codes: K35 L16 N63 O33 R40 (search for similar items in EconPapers)
Pages: 75
Date: 2025-06
New Economics Papers: this item is included in nep-eur and nep-his
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