KCG Lunch-time Seminar

Trade Shocks, Labor Markets and Elections in the First Globalization — Felix Kersting

12 Mär 2021

Institut für Weltwirtschaft


Felix Kersting (HU Berlin)


We study the “grain invasion” of the first globalization (1880-1913) as a historical counterpart to today’s China shock. We show that trade shocks in agriculture depressed rural counties in Prussia. However, we do not find the decline in income per capita and the political polarization that studies find for today’s trade shock. Instead, workers left affected counties in large numbers. Our results suggest that the negative and persistent effects of trade shocks we see today are not a universal feature of trade integration, but depend on labor mobility, too. For our analysis, we combine data from three industrial and agricultural censuses on the county level with national trade data at the product level. For causal identification, we instrument German trade exposure with trade exposure for Italy.


Felix Kersting (HU Berlin) — Wolf-Fabian Hungerland (BMWi) — Richard Bräuer (IWH Halle)


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