Coercive Contract Enforcement: Law and the Labor Market in 19th Century Industrial Britain
AbstractBritish Master and Servant law made employee contract breach a criminal offense until 1875. We develop a contracting model generating equilibrium contract breach and prosecutions, then exploit exogenous changes in output prices to examine the effects of labor demand shocks on prosecutions. Positive shocks in the textile, iron, and coal industries increased prosecutions. Following the abolition of criminal sanctions, wages differentially rose in counties that had experienced more prosecutions, and wages responded more to labor demand shocks. Coercive contract enforcement was applied in industrial Britain; restricted mobility allowed workers to commit to risk-sharing contracts with lower, but less volatile, wages.
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Date of creation: May 2011
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Find related papers by JEL classification:
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
- N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
- N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-30 (All new papers)
- NEP-HIS-2011-05-30 (Business, Economic & Financial History)
- NEP-LAB-2011-05-30 (Labour Economics)
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