The price of human capital in a pre-industrial economy: Premiums and apprenticeship contracts in 18th century England

Training through apprenticeship provided the main mechanism for occupational human capital formation in pre-industrial England. This paper demonstrates how training premiums (fees) complemented the formal legal framework surrounding apprenticeship to secure training contracts. Premiums varied in response to scarcity rents, the expected productivity of masters and apprentices, and served as compensation for the anticipated risk of default. In most trades premiums were small enough to allow access to apprenticeship training for youths from modest families.     

Working hours in the European periphery: The length of the working day in Spain, 1885-1920

This paper studies the decline of the working day in Spain from 1885 to 1920. The decline was more continuous than previously thought. Differences in hours reinforce wage differentials, showing labor markets were not well integrated. Cross-sectional and time-series analysis suggests that hour reductions reflect a labor supply rather than a labor demand effect. Given the comparatively slow growth of real wages in Spain from 1870 to 1920, the Spanish case shows that international convergence in hours of work must have been stronger than convergence in wages.     

HECKSHER-OHLIN IN CANADA: NEW ESTIMATES OF REGIONAL WAGES AND LAND PRICES

Many immigrant-receiving and land-abundant countries experienced a diminishing ratio of wages to land prices during the globalisation era from 1870 to 1910. Factor price evidence suggests that Canada does not fit the pattern. We present the first Canadian estimates of region-specific wages and land prices that span the period from 1871 to 1925. Our evidence indicates that while Canada as a nation looks like an anomaly in the era of convergence, this is largely an artefact of aggregating the experience of the labour-abundant eastern provinces with the late-settling and land-abundant western provinces.     

The effects on insurance costs of restricting undocumented immigrants' access to driver licenses

Proponents of issuing driver licenses to undocumented immigrants argue that the number of uninsured motorists and car accidents would decrease, thus improving public safety and lowering costs associated with car insurance. This study gives an overview of competing cost reduction and public safety arguments and examines the issues surrounding undocumented immigrants and driver licenses. It empirically assesses the effect on the average cost of auto insurance of restricting undocumented access to legal driving documents. We use a fixed effects model for panel data to test the effects on real average insurance expenditures of restricting undocumented immigrants' access to driver licenses, while controlling for other relevant factors suggested in the literature. Our main finding is that on net such restrictions raise the average annual cost of auto insurance by an estimated $17.22 ($2009) across states that have enacted such restrictions.     

Cross‐Country Evidence on Labor Market Institutions and Young Adult Employment through the Financial Crisis

I develop and analyze a set of cross‐country facts regarding employment and wage setting institutions over the decade surrounding the 2008 financial crisis. Among long‐industrialized countries, young adult employment declined more than prime age employment over this time period. I show that differences in countries' wage setting institutions strongly predict variations in the magnitude of declines in young adult employment. Both unconditionally and conditional on changes in macroeconomic conditions, young adult employment declined 5 percentage points less in countries where wage setting is driven by collective bargaining arrangements than in countries with statutory wage floors. Evidence on the evolution of legislated minimum wage rates and of an asymmetry in the relationship between growth and young adult employment suggest an important role for a standard “wage rigidity” mechanism.     

Mechanical refrigeration, seasonality, and the hog-corn cycle in the United States: 1870-1940

This paper examines the role of mechanical refrigeration in seasonality and structural change in the U.S. hog-corn cycle, 1870-1940. This period covers an era in which the widespread adoption of mechanical refrigeration greatly affected the ability to store and transport perishable commodities. These developments in turn altered the seasonal production and price structure for many commodities, including pork. We use a new class of time series models, time-varying smooth transition autoregressions (TV-STARs), to document both the structural change and the nonlinear features observed in seasonal patterns for the U.S. hog-corn price relationship during the late nineteenth and early twentieth centuries.     

The rise of migration and the fall of self employment in rural China's labor market

When examining questions regarding the Lewis model, one of the most salient set of facts involves the shift of labor between agricultural and the off farm sectors. The goal of this paper is to answer several questions about the nature of this movement: How has the expansion of the economy after 2000 affected off farm labor market participation? Has off farm labor continued to rise? What is this rise being driven by—migrant wage earners or self employment opportunities? What is, in part, driving these trends? Using a national representative set of data that consists of two waves of surveys done in 2000 and 2008 in six provinces, the paper finds that off farm labor market participation has continued to rise steadily in the early 2000s. However, there has been a structural break in the trends of occupational choice before and after 2000. Unlike before 2000, after 2000 migration's growth accelerated; during this same period the self employed subsector stagnated. The number of wage earning migrants in 2008 was greater than the number of those in the self employed subsector. The data also show that the rise in wage-earning migration is mainly being driven by the younger cohorts. Our analysis also shows that the rise of migration is happening in conjunction with a rising unskilled wage.     

Paying for privilege: the political economy of Bank of England charters, 1694-1844

The Bank of England was established by Parliament in 1694 as an explicitly temporary institution, which could be dissolved upon one year’s notice after the 11-year life guaranteed by its initial charter had passed. Renewed nine times between 1694 and 1844, we argue that the element of renegotiation inherent in the Bank’s existence reflected uncertainty, by both Parliament and the Bank, and we test this hypothesis by analyzing the timing of the renewals of the Bank’s charter. We find renegotiation of the charter was initiated by Parliament when the Crown’s budgetary circumstances, shaped by unforeseen military expenditures, required additional funds and when the monopoly value of the Bank’s charter rose.     

New deal or no deal in the Cotton South: The effect of the AAA on the agricultural labor structure

The Agricultural Adjustment Act has often been held responsible for the rapid reduction of share tenants and sharecroppers (laborers paid shares of the crop) during the 1930s. However, this conclusion has come with limited empirical backing. We shed new light on the consequences of this New Deal policy by empirically testing the role that the AAA cotton reduction program had on the displacement of share tenants and sharecroppers in the Cotton South. The results suggest that the AAA played a significant role in the displacement of black and white sharecroppers and black managing tenants even though it was a violation of AAA contracts for landlords to displace these workers.     

Institutions, wages, and inequality: The case of Europe and its periphery (1500–1899)

This paper explores the long-run relationship between institutions and wage outcomes in Europe and its periphery. I find that cities that exercised stronger institutional protection of private property experienced: (i) higher levels of both skilled and unskilled real wages, as well as (ii) lower levels of inequality as measured by the skilled–unskilled wage ratio. While the first result corroborates existing work on the positive growth effects of better institutions, the second finding is more novel to the literature. Some explanations are proposed for how stronger institutions can cause an increase in the relative supply of skilled workers, thus lowering wage inequality.     

Taking technology to task: The skill content of technological change in early twentieth century United States

This paper uses new data on the task content of occupations to present a new picture of the labor market effects of technological change in pre-WWII United States. I show that, similar to the recent computerization episode, the electrification of the manufacturing sector led to a “hollowing out” of the skill distribution whereby workers in the middle of the distribution lost out to those at the extremes. OLS estimates show that electrification increased the demand for clerical, numerical, planning and people skills relative to manual skills while simultaneously reducing relative demand for the dexterity-intensive jobs which comprised the middle of the skill distribution. Thus, early twentieth century technological change was unskill-biased for blue collar tasks but skill-biased on aggregate. These results are in line with the downward trend in wage differentials within U.S. manufacturing up to 1950.     

The Effect of Social Security Contributions on Coverage and Wages: A Gender Perspective Using a Natural Experiment from Colombia

This article investigates, from a gender and marital status perspective, the effects of pension and health care contributions on the employment and wages of workers covered by social security regulations. To do this, I use as a natural experiment a reform implemented in Colombia during the mid‐1990. In particular I employ a differences‐in‐differences estimation based on an endogenous switching‐regression model that accounts for self‐selection into coverage. My results indicate that, for females, a 10% increase in contributions reduces the relative wages of covered workers by 7.2%. On the other hand, for males, the reform increases the relative wages of covered workers by 7.1%. Among females, the effect is predominantly present in single women. Among men, divorced and widowed workers are the only group not to experience an effect on earnings. For most family groups, the social security reform has no significant effect on coverage.     

The Effect of Immigration on Unskilled Native Workers: Evidence from a Natural Experiment

This study exploits the natural experiment, provided by the start of the second intifada, to measure the effect of immigration on the wage and employment of unskilled native workers. It finds that immigration has no effect on the wage or employment of unskilled Jewish workers. The wage and employment of the least‐skilled Israeli Arab workers (with zero to five years of schooling) are adversely affected by immigration. The slightly more skilled Arab workers (with six to 11 years of schooling), in contrast, are positively affected by immigration, suggesting a complementarity effect with this group. Different explanations are proposed.     

The Changing Benefits of Early Work Experience

We examine whether the benefits of high school work experience have changed over the last 20 years by comparing effects for the 1979 and 1997 cohorts of the National Longitudinal Survey of Youth. Our main specifications suggest that the future annual earnings benefits of working 20 h per week in the senior year of high school have fallen from 17.4% for the earlier cohort, measured in 1987–1989, to 12.1% for the later cohort, in 2008–2010. The gains have diminished by similar amounts for men and women but much more substantially for those who do not later attend college than for those who do. We further show that most of the differential between cohorts can be attributed to the way that high school employment is related to subsequent adult work experience and occupational attainment.     

Living Costs and Real Wages in Nineteenth Century Lima: Levels and International Comparisons

This article provides new evidence on salaries and living standards of low-skilled workers in Lima in 1825–73. During this period, low-skilled workers in Lima could cover their basic needs. Real salaries increased in the early-1830s, but declined in the following decades. Real salaries declined during the Guano Era in spite of the commercial bonanza. An international comparison shows that Lima had lower living standards than Northern Europe and Australia, but higher than Asia. In most of the nineteenth century, Peru and other Latin American economies had higher welfare ratios than China, India, and Japan.     

The impact of E‐Verify mandates on labor market outcomes

A number of states have adopted laws that require employers to use the federal government's E‐Verify program to check workers' eligibility to work legally in the United States. Using data from the Current Population Survey, this study examines whether such laws affect labor market outcomes among Mexican immigrants who are likely to be unauthorized. We find evidence that E‐Verify mandates reduce average hourly earnings among likely unauthorized male Mexican immigrants while increasing labor force participation among likely unauthorized female Mexican immigrants. Furthermore, the mandates appear to lead to better labor market outcomes among workers likely to compete with unauthorized immigrants. Employment rises among male Mexican immigrants who are naturalized citizens in states that adopt E‐Verify mandates, and earnings rise among U.S.‐born Hispanic men. There is no evidence of significant effects among U.S.‐born non‐Hispanic whites.     

THE ECONOMIC CONSEQUENCES OF HARVESTER

A century has elapsed since the ‘New Protection’ policy of the newly established Commonwealth government of Australia gave birth to the ‘basic wage’ principle following the ‘Harvester’ judgement. This paper re‐examines, with special reference to economic considerations – unemployment, the tariff, and the wage structure – the controversy surrounding the initial formulation of this principle and the evolution of its application under the federal wage fixing tribunals and the legislation under which they operated. It concludes that even the vestigial remains of the concept underlying Harvester have progressively disappeared from Australian wage fixing principles.     

Does a reduction in the length of the working week reduce unemployment? Some evidence from the Italian economy during the Great Depression

This paper studies the Italian labor market during the 1930s. Using monthly data on eight manufacturing sectors for the period 1929-1939, we evaluate the effects of the introduction, at the end of 1934, of the 40 h working week on the demand for labor. The results support the view that the reduction of the level of standard hours can be effective in stimulating employment provided that it does not imply an increase in hourly wage rates.     

A Tale of Two Armies: Comparative Growth in the Mirror of the First World War

Soldiers born during the late nineteenth century were taller in Australia than in Canada. A widening of the gap for those born in the 1890s supports the more optimistic interpretation of Australia's 1890s depression and is consistent with the ‘hazardous growth’ hypothesis of an inverse relationship between economic change and public health. The rural–urban stature gradient was steeper in Australia although Canada had greater stature inequality in all other dimensions. Native-born soldiers were taller than the British-born in both countries. We see no evidence of selective migration effects that would imply feedback from stature to growth.