The social cost of industrialization : Evidence from the 19th century Swedish iron industry

The transition from artisanal to industrial production is an important step in economic development, but the impact on the artisanal workers remains poorly understood. In the latter half of the 19th century, technological advances in Swedish iron production initiated a wave of industrialization that caused artisanal finery forges and blast furnaces to close down as production moved to large-scale ironworks. Using linked census data and a unique dataset covering the universe of iron producers between 1860 and 1890, we investigate the effect of the site closures on worker outcomes. We find that workers displaced by the industrial transformation became 23 percentage points more likely to exit the iron industry, 25 percentage points more likely to migrate to another parish, and experienced a 10 percent decline in earnings relative to other groups of workers. While we find that the transition from artisanal to industrial production had persistent adverse consequences for workers, these effects do not appear to carry over to the next generation. To our knowledge, this paper is the first to quantify the effects of worker displacement during the second industrial revolution