Authors: Louis Henderson and Moritz Kaiser
Earlier this year, Americans elected a president who promised to enact steep tariffs to promote domestic manufacturing. Rapid changes to trade policy followed, and at the time of writing, U.S. imports and exports face an effective tariff rate of approximately 30 per cent, a nearly ten-fold increase relative to the previous administration (Conteduca et al 2025). The so-called ‘China shock’ provides the political economic context, an interaction of technological change and earlier trade liberalization that caused incomes to stagnate at the middle of the distribution (Baldwin 2025). Frustrated middle-class voters, it seems, were swayed by the promise to ‘Make America Great Again’ and restore lost economic opportunity through radical changes to trade policy.
Will it work? Will the trade shock create new pathways for social mobility, or will it entrench bounded, protection-dependent labour markets reminiscent of earlier protectionist eras? To understand the deeper labour market effects of abrupt trade realignments, we turn to a historical analogue: Coventry, England, in the early 1800s. There, trade liberalisation triggered far-reaching changes in occupational structure and institutional dynamics. Coventry’s experience offers a powerful lens through which to examine the interplay between trade shocks, political economy, the value of different forms of human capital, and the possibilities for intergenerational mobility.
The first industrial revolution in Britain—one of the earliest cases of sustained economic growth—was accompanied by sweeping changes in the country’s economic structure. However, empirical research finds that industrialisation led to only modest gains in social mobility and that long-run mobility rates remained strikingly stable (Bukodi and Goldthorpe 2018; Clark and Cummins 2015; Miles 1999).
Existing scholarship rarely examines how institutional discontinuities—such as sudden shifts in trade policy—interacted with the evolving value of industry-specific and general human capital to affect mobility patterns. Using industrialising Coventry as a case study, our paper addresses this gap by tracing how changes in trade policy, local governance, and skill formation shaped male social mobility. Using a quasi-regression discontinuity design and a novel linked dataset, we show that liberal reforms to trade policy and municipal governance in the late 1820s and early 1830s reduced the value of industry-specific social capital, while increasing the returns to general human capital, thereby enabling a broader range of economic opportunities.
Coventry’s Political Economy: Trade Liberalization, Municipal Reform and the Decline of Rent-Seeking
During the late 18th and early 19th centuries, Coventry’s economy was dominated by an artisanal silk ribbon-weaving industry. Male weavers enjoyed high wages and were shielded from international competition due to mercantilist trade policies, which until 1826 banned the importation of silk ribbons (Prest 1960). However, wages represented just one part of a broader system of economic entitlements, which centered around the interaction of the municipal corporation, the freemen, and M.P.s.
Rent-sharing arrangements within the freeman electorate and access to municipal charities augmented the incomes of the enfranchised male working class and reduced dependency on wages. Male silk ribbon weavers formed the largest portion of the electorate and therefore benefitted from this system. Coventry’s two M.P.s were either independent or candidates endorsed by the municipal corporation. Independent and municipal M.P.s both represented the interests of weavers, while the latter also sought to expand the venal rent-seeking opportunities for the corporation (Searby 1972). Besides its candidates in Parliament, the municipal corporation used generous local charities to curry the favour of the freemen weavers and regulated weavers’ pay (Fischer 2009; Thorne 1989). These non-wage entitlements, tied to political support, were a cornerstone of Coventry’s political economy and formed a reliable income stream for the freemen.
The importation ban that had sustained Coventry’s silk industry was substituted by a tariff in 1826, increasing the industry’s exposure to international competition. Coventry’s ribbon weavers now competed against French ribbons, which exerted downward pressure on wages and reduced the industry’s economic stability. This shock to Coventry’s economy was reinforced by the legislative changes wrought by the Municipal Corporation Act of 1835. This law aimed to reduce corruption in local governance by decentralizing control over public charities, thus breaking the previously direct link between political allegiance and access to municipal resources. Taken together, these changes marked a significant break with the past and reduced both the wage and non-wage entitlements of silk ribbon weavers (Parliamentary Papers, 1832). The political advantages of silk ribbon weavers were declining.
Human Capital and Social Mobility: A Tale of Two Regimes
The structural changes within Coventry’s political economy also affected the role of education in social mobility. By analyzing records from Katherine Bayly’s charity school for boys, we observed an increasing return on literacy and numeracy skills in the liberalized market economy, where politically derived entitlements played a diminished role. A unique feature of the school is that its admission policy featured an age cutoff at age eleven, enabling us to examine quasi-random variation in admission around this threshold. Admitted boys had an educational advantage over those rejected for failing to meet the age requirements in numeracy, literacy, and apprenticeship (which was subsidized by the charity).
This educational advantage, however, did not translate into upward mobility. Instead, before the liberalization, educated boys disproportionately entered the ‘unskilled’ weaving trade, which promised occupational rents through the freeman system. After the liberalization, however, school graduates pursued a wider range of skilled occupations, underscoring how the value of literacy and numeracy – forms of general human capital – increased following changes in the political economy regime.
Conclusion
Our study of industrializing Coventry offers valuable insights into how institutional reforms and economic liberalization influence social mobility patterns. Social mobility cannot be explained solely by educational inputs but was embedded in political economy institutions. Instead, we argue that male social mobility patterns were shaped by the relative value of general human capital versus specific occupational entitlements of weavers. Shifts in political economy reduced weavers’ occupational entitlements, making upward mobility through literacy and numeracy relatively more promising in skilled independent trades. Within the literature on historic social mobility, more attention needs to be paid to the interaction of schooling and occupational training with economic, social, and political institutions. As the global economy once again enters a period of heightened protectionism, our findings suggest that contemporary trade shocks—like those triggered by U.S. tariff escalations—may similarly reorder the value of different forms of human capital and reshape the structure of opportunity.
Bibliography
Government reports:
Parliamentary Papers (1832), XIX.1 Select Committee on Silk Trade. Report, Minutes of Evidence, Appendix, Index (19), p.105.
Works cited:
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