This is Naked Capitalism fundraising week. 141 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page, which shows how to give via check, credit card, debit card, PayPal. Clover, or Wise. Read about why we’re doing this fundraiser, what we’ve accomplished in the last year,, and our current goal, strengthening our IT infrastructure.
Yves here. The post below has an extremely important finding: that the damage done by deindustrialization is lasting, extending across generations and even afflicting those able to relocate. This shows that the societal cost of outsourcing and offshoring to health and earning potential. This finding is particularly jarring, since as yours truly has described over many years, at many companies, the financial case for offshoring was often weak and rarely allowed for costs like loss of know-how and increased business risk. A couple of public company executives have told me that even in the face of not-compelling forecasts, they still went ahead with offshoring plans because they knew the announcement would give the stock a pop.
And remember, this study looked at the coal mining industry, with its famously backbreaking and often health-harming labor. But in the UK, these were union jobs, or at least had been union jobs. I was in London on an extended assignment when the Thatcher government was prosecuting its ultimately successful campaign to break the coal miners’ union. It was front page news most days.
The authors find the shock of a pit closure had a huge, negative lifetime impact on children. Yet our putative betters have handwave answers of the “Let them eat training” sort.
By Björn Brey, Assistant Professor Norwegian School of Economics (NHH) and Valeria Rueda, Associate Professor of Economics University Of Nottingham. Originally published at VoxEU
Industrial decline has been directly linked to a worsening of various social and economic indicators. This column examines how the impacts of deindustrialisation in the UK reverberate across generations, finding significant effects on the health, wealth, and living standards of those who grew up under industrial decline. The ability to migrate to wealthier parts of the country is not sufficient to offset these negative effects.
The recent decline in industrial jobs in developed and emerging countries has been linked to worsened health (Case and Deaton 2020, Case 2020), the disintegration of family ties (Autor et al. 2018), and the formation of a geography of political discontent (Autor et al. 2020, Rodríguez-Pose 2018, Rodríguez-Pose et al. 2024). Previously prosperous places are now ‘left behind’, with worse relative living standards, education, and productivity (Moretti 2022, Overman and Xu 2022). Few countries in the developed world have seen such stark increases in regional inequality as the UK, the country with the fastest deindustrialisation in the developed world (Mcann 2019, Stansbury et al. 2023).
In this column, we show that deindustrialisation has persistently affected living standards in the UK. Our recent research documents effects on the health, wealth, and living standards of those who grow up under industrial decline. These effects persist even if people migrate out of affected regions, and they carry over generations (Brey and Rueda 2024). Industrial decline thus not only affects those who work in endangered industries; their children and their grandchildren are also durably worse off. Moreover, the availability of better economic conditions elsewhere does not fully mitigate this impact. Deindustrialisation thus directly threatens equality of opportunities for future generations.
We focus on the collapse of the British coal industry, one of the starkest cases of industrial decline in the 20th century. Economic historians have extensively written about the importance of Britain’s coal in the Industrial Revolution (e.g. Pomeranz 2000, Allen 2009, Wrigley 2010, Fernihough and O’Rourke 2021). Coal mining employed more than 700,000 people by the end of the 1950s. That number halved within a decade, following the industry’s most dramatic shrinkage post WW2 (see Figure 1). Waves of pit closures continued washing over British coal production until its virtual disappearance in the 1990s. Today, the former coalfields consistently rank among areas with the highest levels of deprivation in the country, a matter of sufficient public concern to grant the formation of an all-party parliamentary research group working on policy proposals for these regions (All-Party Parliamentary Group on Coalfield Communities 2023).
Figure 1 Employment in mining in the UK in the twentieth century
Note: See Brey and Rueda (2024) for details.
Our paper estimates the impact of mine closures on those who experienced this economic shock as children. We leverage longitudinal data that follows all children born during a week of 1958 and of 1970 (UK Longitudinal Studies). These data allow us to track people throughout their life and gather information on their parents and their children. We combine them with data produced and shared by the Northern Mine Research Society giving information on all coal mines that have operated in the UK. We can thus compare outcomes, at each life stage, between counties and cohorts, depending on their exposure to mine closures and conditional on a rich set of controls. We ensure that our findings are not driven by unobserved confounders of pit closures and living standards in a variety of ways. In particular, we verify that before the shock, children are comparable: at birth, there is no relation between health outcomes and socioeconomic conditions depending on later exposure to the shock. Moreover, using fixed effects, we account for determinants of living standards that are specific to each county and to each cohort. Finally, we use an instrumental variable that exploits the fact that older pits were closed first.
Finding 1: Individuals Exposed to Pit Closures During Childhood Have Worse Health Throughout Life
Individuals who grow up in counties with a higher ratio of pit closures to population are significantly shorter. Height, a well-established indicator of overall health and living conditions, correlates with economic outcomes in adulthood (e.g. Hatton 2014). Height gaps are strongest in early childhood; despite some catching-up, a significant difference persists into adulthood (see Figure 2). This adult gap – 4% of a z-score, or 0.3 cm – is substantial, comparable to the lower-bound estimated impact of the Irish famine on survivors’ height (Blum et al. 2022).
Figure 2 Effect of pit closures relative to the population on height over life
Note: Coefficients are standardised.
Furthermore, those exposed to pit closures in childhood have BMIs that lean more towards extreme categories, with the effect on overweight categories starting in adolescence to mid-30s and the one on underweight categories starting later in life (see Figure 3). Further analysis reveals that the impact on underweight is stronger for women, while that of overweight is slightly more pronounced for men.
Finally, we also observe worse indicators of general physical health in childhood and higher incidences of a variety of health conditions in adulthood such as diabetes, back pain, and cancer. We also observe worse self-reported mental health in adulthood, including a markedly higher likelihood of states of depression (see Figure 4).
Figure 3 Effect of exposure to pit closure relative to the population on extreme BMI categories over life
Note: Coefficients are standardised.
Figure 4 Effect of exposure to pit closure relative to the population on reporting states of depression over life
Note: Coefficients are standardised.
Finding 2: Pit Closures Are Associated with Worse Living Conditions in Childhood
What can explain the durable impact of pit closure on health? Figure 5 illustrates that mine closures correlate with more deprived living conditions in in mid-childhood (age 10): parents are more likely to have worse employment outcomes, to have taken weeks off work due to illness and to receive benefits; children receive fewer resources from the family, as proxied by leisure expenses and a higher propensity to receive free school meals; finally, their housing conditions are worse following a variety of indicators. In sum, affected children experience economic hardship in childhood, potentially explaining worse health outcomes over life.
Figure 5 Effect of exposure to pit closure relative to the population on living environment of children
Finding 3: Individuals Exposed to Pit closures During Childhood Accumulate Less Wealth as Adults and Their Children Are Less Healthy
How persistent is this effect? Does it affect economic conditions in adulthood? Does it carry through to the next generation? Figure 6 shows that the economic impact carries through adulthood, with respondents less likely to be homeowners and more likely to receive benefits, women also tend to earn less (left-hand panel). Moreover, when they have children, their sons and daughters have a more difficult start in life: the parents have them much earlier (teenage years), and the babies are more likely to be born late and to have had some health condition at birth (right-hand side panel, outcome “Disorder”).
Interestingly, exposure to pit closures in childhood is associated with better education, significantly so for men. This result aligns with previous findings showing that manufacturing and mining industries increase the opportunity cost of education, especially for men (Black et al. 2005, Esposito and Abramson 2021, Franck and Galor 2021). Further research is needed to understand why despite higher male education, exposure to the shock still shapes wealth. Potential explanatory channels are the direct impact of health, inheritance, and assortative matching on the marriage market.
Figure 6 Effect of exposure to pit closure relative to the population of economic conditions in adulthood and children of respondents
Finding 4: Migration is an Imperfect Mitigation Strategy
In the aftermath of local economic shocks, migrating to opportunity is a natural coping strategy. In our case, this was the option favoured by the government and the reason invoked to dismiss any additional targeted support. Longitudinal studies permit tracking movers. We observe three main facts about migration (see Section 5.4 in Brey and Rueda 2024). First, pit closures did not trigger mobility later in life. If anything, the probability of migrating decreases. Although incentives to out-migrate were heightened, the resources to do so decreased, an effect appears to dominate. Second, migration was not accessible to all. Those who migrated were born in families with more educated mothers and fathers or with fewer local ties (younger parents of single-parent households). Finally, the impact of the shock is diminished but not fully reverted after migration. Taken together, our findings suggest that migration was not a perfect solution. Access to it was unequally distributed and those who migrated still see some negative impact.
Lessons
Our research shows that deindustrialisation can durably affect living standards, and the effects are carried across multiple generations. These findings are salient to current policy debates about increasing levels of inequality and poverty in developed countries (e.g. Institute for Fiscal Studies 2024). They highlight that in the absence of any additional support, people born in places that industries have left behind carry health and economic scars that are transmitted to the next generation. These long-lasting consequences are not resolved by access to better opportunities. Few people move, and those who do keep a scar.
See the original post for references
I think this research conflates two quite distinct settlement types – mining communities and industrial communities, both of which have been badly hit by deindustrialisation but usually have quite distinct trajectories when the original industries become outdated or defunct (or in the case of the British coal industry, murdered).
Mining is a highly specialised activity with skills and plant which can’t be easily transferred to other activities. Definitionally, it tends to focus on where the mineral reserves are, and these are often not conveniently located as far as any other type of activity is concerned. Most Welsh mining communities, for example, are in mountain areas with no real alternatives for other industry. Settlements have grown up around mineral resources since the age of flint, and they usually died out forever once the mineral reserves are exhausted – the world is full of mining ghost towns for a reason. Younger men with skills moved to new reserves (for example, numerous Cornish copper miners moved to the US in the 19th Century), leaving behind the less mobile.
Rust belt industrial areas were usually located close to coal mines, as to make, for example, steel you need more coal than iron ore, so it always made sense to shift the ore to the coal, not vice versa. The exception would be where there is a very convenient water link that allows you to bring the coal to the ore, but the US is one of the few parts of the world where geography was so obliging. So early industrial cities, from probably the first, Birmingham in the UK, to Manchester, Dusseldorf, etc., etc., were located at convenient nodes where the coal and iron (and other essential minerals) could be brought together, first by water, later by train.
The latter process means that many industrial cities still have a certain locational logic, even after the coal and iron runs out. They are left with a legacy of infrastructure, and perhaps most importantly, a variety of human skills which can, with luck and some effort, be transferred. You can often see this process layered almost like archaeology. In parts of the West Midlands in the UK, dig into any old industrial site (preferably with full hazmat), at the base you’ll find old coal works with the remains of early glass making and specialist iron work. This was displaced in the mid-19th Century by mostly chemical manufacturers (either associated with steel working or the phosphorous industry). The upper layer, from the 20th Century onwards, will be marked by the residues of more advanced forging and steel work. All these were based on the original coal layers (there are multiple coal beds of varying quality beneath the entire region), but even when the coal ran out in the mid-20th century, the accumulated infrastructure (human and physical) kept the area going. Up until the 1980’s and the Tories decided to kill it all off. But even then, the area has still, if not quite prospered, maintained a reasonable economy, mostly based on services. So while rust belt cities can shrink and decay, they rarely die completely, and often can prosper (Manchester and Leipzig or Bilbao being examples in Europe). The cities that have failed most severely tend to be those which were highly focused on a narrow industry or service – for example, Liverpool (mostly a trading port) has never really recovered from its loss of importance as an entrepot, while Manchester has relatively speaking done much better. Its probably simply a matter of scale – Manchester was always bigger, and so got the first bite of any new industry coming to the region.
So I think its a category error to conflate the death of mining communities with de-industralized urban areas. The latter can prosper if there is sufficient focus on building on existing strengths (locational, infrastructural, and a skills base). Scale also seems extremely important. Big cities have a momentum that ensures that they just keep attracting people and resources, long after apparent locational/economic logic should see them stagnate. Smaller cities can struggle, even with intensive direct investment. Sometimes cities can recover through direct government intervention – sometimes it just seems to happen anyway.
Thanks. Nottingham is an unfortunate victim of both phenomena you mention. It suffered the perfect storm of political decisions in the post-war era. The Great Central Railway was a victim of the Beeching cuts, yet was probably the most insane of a great number of truly insane cuts made to British Rail: Yes, the line duplicated a lot of the (retained) Midland Mainline but its “flaw” (that it didn’t serve some key cities between London and Nottingham) was also its benefit. Its incredibly straight nature meant that it would have been perfect for HS2 and north of Nottingham it served all the South Notts mining communities, which after its 1960s closure put them in a very precarious position in terms of getting their coal to where it was needed.
The Lace Market suffered deindustrialisation. Meanwhile Thatcher’s “divide and rule” policy (getting parts of the South Notts miners onside to weaken Scargill’s official NUM) did Nottm no favours as when she won, she simply closed their mines anyway. I had reason to look up the public data on prescriptions for Pregabalin a few years ago by practice across Nottm and outlying suburbs: Hucknall practice (the one with the highest proportion of ex-miners) was a massive outlier. and the patients were NOT just the ex-miners with chronic pain but (judging by age bands) their offspring.
When I was a kid in late 70s and 80s we lived in one of the last privately built/owned estates in north Nottm. The police go in convoys to not just that estate these days but also frequently around the “posher” estate my parents moved to in mid 1990s and where we are now. We are part of the northern half of the “doughnut” of parliamentary constituencies surrounding metropolitan Nottingham – key section of the “red wall”. Yet nobody around here has enthusiasm for Labour, who they feel bitterly let them down down during the pit closure and deindustrialisation period of the 1980s. The neighbouring constituency is Ashfield (of Lee 30p Anderson fame) – Ashfield is demonstrably a failed suburb; all the former pit villages in it and north of where I live are awful; social order has gone almost entirely.
There was some regeneration in the New Labour era (those bits of the main railway line not sold off were repurposed as tramlines and other schemes built badly needed NHS buildings) but it was all funny money aka PFI. There is a farm shop 2 miles from here: nice but still nothing compared to the ones that were almost every 300 metres along the coast of Norfolk (a stone’s throw from Sandringham) where we holidayed last week. It’s those contrasts that caused me to point out to dad just how much of a failed state we are. Plus you sense a simmering resentment under the surface, which is why people in Ashfield have given up on all the major parties. The obituaries in local papers are full of deaths of people of age/fitness that we never used to see. Dark times.
Ah, the Great Central Rail Line – closing this was probably the most bafflingly stupid decisions in economic history. It was one of the last major railways built in the UK (at least until the Channel Tunnel Rail link) – amazing to think there was a nearly a century between them. It was also built arrow straight, which is a godsend to railway operators. Once the project managers took over from the engineers aroundabout 1850 in UK rail engineering, most lines were much more poorly designed and constructed (albeit, far more sensible in accounting terms). The early railway lines like London to Bristol or Dublin to Belfast – flat and direct – have proven far cheaper to maintain and keep running than the later ones that made the rolling stock do the hard work of going up and down grades and making turns. The Great Central Line was an exception. So its loss as a line and route has in reality cost the UK economy many billions over the decades. The record of HSR shows it would probably take the best part of 100 billion to build something similar from scratch.
I don’t know Nottingham very well, but it seems to me to have suffered relative to cities like Birmingham and Manchester in just not being big enough to be truly self sustaining, while lacking the direct link to London that could allow it to benefit from some overspill. It is interesting to see the different directions East Midlands cities like Nottingham, Sheffield, Derby and Leicester have taken, although the only real conclusion seems to be that there aren’t any hard and fast rules when it comes to urban success or failure.
I am of South Wales, at one time the largest producing, and exporting, region in the world. I will not comment on any of the ‘Findings’ that the author identifies, but I would like to deliver a few of my own. Having spent the best part of seven hours touring around the ‘Valleys’ of Wales on my motorcycle yesterday, I can report as follows –
1. There are many more Public Houses (drinking establishments) shuttered than open for business.
2. Those that are open have the most welcoming attitude to strangers in their midst that I have encountered anywhere.
3. The ex-miner’s terraced houses are all occupied, as far as I can judge.
4. I have no idea how they all earn a living, other than ‘Welfare’, as there are just so very few businesses around.
5. I get the impression when talking with the locals that the ‘glue’ that holds them together is a shared resignation of hopelessness. Those that have had hope have left, and the rest survive in quiet desperation.
It’s so sad!
Not even many Welsh people appreciate just how prosperous south Wales was in the first period of the Industrial Revolution. It was very much at the cutting edge. But it was already in decline by the later part of the 19th Century for a number of reasons – one I think was the lack of a really good natural seaport with access to the valleys, plus the rapid exhaustion of the better coal seams, just as cheaper alternatives were made available.
By some measures, parts of South Wales are among the most deprived areas of Europe, although much depends on how you define the catchments – the southern coastal fringe is quite prosperous. Its noticeable from the last election that those areas are still very Labour – while Welsh nationalism is gathering some strength in northern and western Wales, coinciding I think with the language strongholds. There is also an older retired population, often English, which is deeply conservative.
I don’t know if there are any firm figures on this, but my perception is that the people there are deeply rooted – even in poverty they are reluctant to move even to England, much less farther afield. I suspect that it could be related to the Methodist mindset – looking ahead to salvation rather than dealing with life as it is. There used to be a long tradition of Welsh methodists coming to Ireland to convert the catholic heathens to the way of truth and light (one was an ancestor of mine). Most, like my 5-greats grandfather, lost his faith on encountering whiskey and catholic girls (family legends differ on which was most effective).