DP14542 Export Booms and Labor Coercion: Evidence from the Lancashire Cotton Famine

Author(s): Mohamed Saleh
Publication Date: March 2020
Keyword(s): Cotton, Globalization, Labor coercion, Labor scarcity, Slavery
JEL(s): F16, J47, N35
Programme Areas: International Trade and Regional Economics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14542

Price booms in labor-intensive exports are expected to benefit labor. The surging demand for labor can increase labor coercion, though, if labor is relatively scarce. Using a unique natural experiment, the Lancashire cotton famine in 1861-1865 that prompted Egypt to quadruple its cotton output, and a novel data source, Egypt's population censuses of 1848 and 1868, I document that the cotton famine had a positive impact on labor coercion in rural Egypt. Agricultural slavery emerged, with an influx of imported slaves from Sudan. Owners of large estates confiscated areas with larger (non-slave) local populations. It also had a positive impact on the non-coercive employment in agriculture of local labor. I explain these findings by the scarcity of local labor relative to cotton expansion, and by large landholders' exclusive right to coerce local labor. The findings accentuate the far-reaching unintended consequences of globalization on labor in poorer economies.