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 combined 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 manufacturing 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.
Conflict-driven internal displacements are a common yet understudied phenomenon. We explore the political consequences of such displacements on hosting communities using the case of the forced evacuation of Alsatians to the French interior at the start of WWII. Our identification strategy leverages exogenous variations in exposure to evacuees generated by unexpected deviations from the French evacuation plan. Municipalities that were to receive evacuees from the front zone, a strip of land between the Maginot Line and the French-German border, received a larger-than-expected number of evacuees relative to others. Increased exposure to Alsatian evacuees led to greater support for left-of-center parties after WWII. Additional evidence suggests that an identity response to contact with a co-national but culturally different out-group explains these results.