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Did Henry Ford Pay Efficiency Wages?

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Author Info
Raff, Daniel M G
Summers, Lawrence H

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Abstract

The authors examine Henry Ford's introduction of the five-dollar day in 1914 in an effort to evaluate the relevance of efficiency-wag e theories of wage and employment determination. They conclude that t he Ford experience strongly supports the relevance of these theories. Ford's decision to increase wages dramatically is most plausibly the consequence of labor problems of the kind efficiency-wage theorists stress. The structure of the five-dollar day program is consistent wi th the predictions of efficiency-wage theories. There is vivid eviden ce that the introduction of the five-dollar day resulted in substanti al queues for Ford jobs. Significant increases in Ford productivity a nd profits accompanied the new regime. Copyright 1987 by University of Chicago Press.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 5 (1987)
Issue (Month): 4 (October)
Pages: S57-86
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Handle: RePEc:ucp:jlabec:v:5:y:1987:i:4:p:s57-86

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  2. Harry J. Holzer, 1990. "Wages, Employer Costs, and Employee Performance in the Firm," NBER Working Papers 2830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Harry J. Holzer & Edward B. Montgomery, 1990. "Asymmetries and Rigidities in Wage Adjustments by Firms," NBER Working Papers 3274, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Mark D Brenner, 2004. "The Economic Impact of Living Wage Ordinances," Working Papers wp80, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
  5. Jeannette Wicks-Lim & Mark D Brenner & Robert Pollin, 2004. "Economic Analysis of the Florida Minimum Wage Proposal," Published Studies ps17, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
  6. Riveros, Luis A. & Bouton, Lawrence, 1991. "Efficiency wage theory, labor markets, and adjustment," Policy Research Working Paper Series 731, The World Bank. [Downloadable!]
  7. Robert Pollin & Stephanie Luce & Mark Brenner, 1999. "Economic Analysis of the New Orleans Minimum Wage Proposal," Research Reports rr1, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
  8. Monique Ebell & Albrecht Ritschl, 2007. "Real Origins of the Great Depression: Monopolistic Competition, Union Power, and the American Business Cycle in the 1920s," SFB 649 Discussion Papers SFB649DP2007-006, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  9. A Manning & J Thomas, 1997. "A Simple Test of the Shirking Model," CEP Discussion Papers 0374, Centre for Economic Performance, LSE. [Downloadable!]
  10. Sonia Bhalotra, 2006. "Near rationality in wage setting," Applied Economics, Taylor and Francis Journals, vol. 38(21), pages 2513-2521, December. [Downloadable!] (restricted)
  11. Måns Söderbom & Francis Teal & Anthony Wambugu, 2004. "Does firm size really affect earnings?," Development and Comp Systems 0409011, EconWPA. [Downloadable!]
  12. Joseph A. Ritter & Lowell J. Taylor, 1997. "Economic models of employee motivation," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 3-21. [Downloadable!]
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