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European Economic Integration and the Labour Compact, 1850-1913

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  • Michael Huberman

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  • Wayne Lewchuk

Abstract

Globalization 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 programs - 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, globalization before 1913 was compatible with state intervention. Our findings are consistent with Rodrik's and Agell's for the period after 1945. La mondialisation fut présente dans toute son ampleur en Europe dans la période avant 1913. Or, la croissance des échanges internationaux a suscité l'instabilité des salaires et des emplois. Face à la demande des travailleurs pour des garantis contre l'insécurité, les autorités nationales ont établi des accords de travail composés de programmes d'assurance chômage et de compensation pour les accidents de travail, ainsi que d'autres mesures fixant la journée du travail et assurant l'inspection des entreprises. Ces accords ont donné aux travailleurs un type d'assurance car ils comprimaient les structures des salaires. Dans cet article, on construit pour dix-sept pays européens un indice combinant des réglementations dans les marchés du travail et des programmes d'assurance sociale. L'indice varie positivement avec le volume des échanges internationaux. On conclut que les accords de travail ont donné une raison pour les travailleurs de supporter le libre-échange. Donc, dans les années avant 1913, la mondialisation était associée à l'intervention de l'État. Nos résultats confirment ceux de Rodrik et d'Agell pour la période après 1945.

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Bibliographic Info

Paper provided by CIRANO in its series CIRANO Working Papers with number 2002s-34.

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Date of creation: 01 Apr 2002
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Handle: RePEc:cir:cirwor:2002s-34

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Keywords: globalization; international trade; market regulation; welfare state; economic integration; globalisation; commerce international; réglementation de marché; intégration économique; État providence;

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Citations

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Cited by:
  1. 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.
  2. Guillaume Daudin & Matthias Morys & Kevin H. O’Rourke, 2008. "Europe and Globalization, 1870-1914," Documents de Travail de l'OFCE 2008-17, Observatoire Francais des Conjonctures Economiques (OFCE).
  3. 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.
  4. repec:spo:wpecon:info:hdl:2441/6145 is not listed on IDEAS
  5. 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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