Does industrialization affect segregation? Evidence from nineteenth-century Cairo

We investigate the impact of state industrialization on residential segregation between Muslims and non-Muslims in nineteenth-century Cairo using individual-level census samples from 1848 and 1868. We measure local segregation by a simple inter-group isolation index, where Muslims' (non-Muslims') isolation is measured by the share of Muslim (non-Muslim) households in the local environment of each location. We find that relative to locations that did not witness changes in the instance of industrialization, the opening of Cairo railway station in 1856 differentially increased Muslims' isolation from non-Muslims (conversely, decreased non-Muslims' isolation) in its proximity and that the closures of textiles firms in 1848-1868 differentially decreased it. The results are arguably driven by an "indirect" labor market mechanism, whereby state industrialized firms crowded in private-sector unskilled jobs that attracted greater net inflows of rural immigrants and unskilled workers who were predominantly Muslims. (C) 2017 Elsevier Inc. All rights reserved.