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

Tobias Korn and Jean Lacroix

No 24-016, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This paper shows that amid aggregate gains, market integration generates within- sector reallocation. To measure this effect, we collected new data on personal bankrupt- cies 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 em- ployment 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.

Keywords: Bankruptcies; Economic Growth; Structural transformation (search for similar items in EconPapers)
JEL-codes: K35 L16 N63 O33 R40 (search for similar items in EconPapers)
Date: 2024-12-06
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Related works:
Working Paper: The Bankruptcy Express: Market Integration, Organizational Changes, and Financial distress in 19 th century Britain (2024)
Working Paper: The Bankruptcy Express: Market Integration, Organizational Changes, and Financial distress in 19th century Britain (2024)
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