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European economic integration and the labour compact, 1850 1913

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  • Huberman, Michael
  • Lewchuk, Wayne

Abstract

Globalisation was a fact of life in Europe before 1913, but as trade shares increased, so did wage and employment instability. Faced by growing pressure from workers, national authorities established labour compacts a packet of labour market regulations and social insurance programmes that defended workers against the risks they faced in and outside the factory. The labour compact provided workers with insurance because it compressed wage structures. We construct an index of labour market regulations and social insurance schemes for seventeen European countries and find that the extent of the labour compact varied with the level of openness. We conclude that the labour compact gave workers reason to support free trade because it protected them from external risk. Contrary to the received view, globalisation before 1913 was compatible with state intervention. Our findings are consistent with Rodrik s and Agell s for the period after 1945.

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Bibliographic Info

Article provided by Cambridge University Press in its journal European Review of Economic History.

Volume (Year): 7 (2003)
Issue (Month): 01 (April)
Pages: 3-41

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Handle: RePEc:cup:ereveh:v:7:y:2003:i:01:p:3-41_00

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Cited by:
  1. Prados de la Escosura, Leandro, 2014. "Economic Freedom in the Long Run: Evidence from OECD Countries (1850-2007," CEPR Discussion Papers 9918, C.E.P.R. Discussion Papers.
  2. Guillaume Daudin & Kevin H O'Rourke & Matthias Morys, 2008. "Europe and Globalization, 1870-1914," Sciences Po publications 2008-17, Sciences Po.
  3. repec:spo:wpecon:info:hdl:2441/6145 is not listed on IDEAS
  4. KAMATA Isao, 2014. "Regional Trade Agreements with Labor Clauses: Effects on labor standards and trade," Discussion papers 14012, Research Institute of Economy, Trade and Industry (RIETI).
  5. Isao Kamatai, 2014. "Regional Trade Agreements with Labor Clauses: Effects on Labor Standards and Trade," Discussion papers e-13-007, Graduate School of Economics Project Center, Kyoto University.
  6. Sergio Espuelas Barroso & Margarita Vilar Rodriguez, 2008. "The determinants of social spending in Spain (1880-1960): Is Lindert right?," Working Papers in Economics 209, Universitat de Barcelona. Espai de Recerca en Economia.

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