Structural Change, Elite Capitalism, and the Emergence of Labour Emancipation.

This article examines the decline of coercive labor institutions during industrialization, focusing on serf emancipation in nineteenth-century Prussia. It argues that capital-owning elites, who accumulated physical capital such as water mills, chose to emancipate serfs to incentivize effective labor effort in care-intensive industrial tasks, thereby increasing returns to their capital. Empirical analysis using county-level data shows that regions with higher initial stocks of elite-owned physical capital experienced faster serf emancipation and lower redemption payments to landlords, even after controlling for alternative explanations like labor scarcity, social unrest, and Enlightenment influences. The study further links emancipation to subsequent growth in skilled labor and human capital accumulation, suggesting that the end of coercion was a necessary condition for efficient investment in occupational skills and education during industrialization.