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The availability of low-wage immobile labor may discourage economic development. In the American South, post-bellum economic stagnation has been partially attributed to white landowners’ access to immobile low-wage black workers; indeed, subsequent Southern economic convergence was associated with substantial black out-migration. This paper estimates that the 1927 Mississippi flood caused immediate and persistent out-migration of black workers from flooded counties. Following this decline in the availability of low-wage black labor, landowners in flooded counties dramatically mechanized and modernized agricultural production relative to landowners in nearby similar non-flooded counties. The temporary displacement of black workers led to a permanent economic transition, though landowners had incentives to discourage black out-migration and maintain a system of labor-intensive agricultural production.