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Rising Wage Dispersion Across American Manufacturing Establishments, 1850-1880

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  • Jeremy Atack
  • Fred Bateman
  • Robert A. Margo

Abstract

We use data from the manuscript censuses of manufacturing for 1850, 1860, 1870, and 1880 to study the dispersion of average monthly wages across establishments. We find a marked increased in wage inequality over the period, an increase that cannot be explained by biases in the data or changes in census enumeration procedures. Based on log wage regressions on establishment characteristics we compute a decomposition of the change in wage inequality between 1850 and 1880. The decomposition reveals that changes in wage structure' the regression coefficients and the standard error of the residuals largely offset each: changes in the coefficients produced a reduction in wage inequality, while residual inequality increased. Most of the rise in wage inequality can be attributed to an increased concentration of employment in large establishments, which paid relatively low wages. We present indirect evidence that the negative effect of size on wages reflected differences in skill composition: workforces in large establishments were less skilled than in small establishments.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7932.

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Date of creation: Oct 2000
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Handle: RePEc:nbr:nberwo:7932

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  1. Rosenbloom, Joshua L., 1996. "Was There a National Labor Market at the End of the Nineteenth Century? New Evidence on Earnings in Manufacturing," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 56(03), pages 626-656, September.
  2. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(3), pages 693-732, August.
  3. Brown, Martin & Philips, Peter, 1986. "Craft Labor and Mechanization in Nineteenth-Century American Canning," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 46(03), pages 743-756, September.
  4. Claudia Goldin, 1990. "Understanding the Gender Gap: An Economic History of American Women," NBER Books, National Bureau of Economic Research, Inc, number gold90-1, July.
  5. Kenneth L. Sokoloff & Georgia C. Villaflor, 1991. "The Market for Manufacturing Workers During Early Industrialization: The American Northeast, 1820 to 1860," NBER Historical Working Papers, National Bureau of Economic Research, Inc 0028, National Bureau of Economic Research, Inc.
  6. Coelho, Philip R. P. & Shepherd, James F., 1976. "Regional differences in real wages: The United States, 1851-1880," Explorations in Economic History, Elsevier, Elsevier, vol. 13(2), pages 203-230, April.
  7. Claudia Goldin & Kenneth L. Sokoloff, 1981. "Women, Children, and Industrialization in the Early Republic: Evidence from the Manufacturing Censuses," NBER Working Papers 0795, National Bureau of Economic Research, Inc.
  8. Kenneth L. Sokoloff, 1984. "Was the Transition from the Artisanal Shop to the Factory Associated with Gains in Efficiency?: Evidence from the U.S. Manufacturing Censuses of 1820 and 1850," UCLA Economics Working Papers, UCLA Department of Economics 300, UCLA Department of Economics.
  9. Goldin, Claudia & Margo, Robert A, 1992. "The Great Compression: The Wage Structure in the United States at Mid-century," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(1), pages 1-34, February.
  10. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(5), pages 1027-59, October.
  11. Claudia Goldin & Hugh Rockoff, 1992. "Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel," NBER Books, National Bureau of Economic Research, Inc, number gold92-1, July.
  12. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
  13. Howard Bodenhorn & Hugh Rockoff, 1992. "Regional Interest Rates in Antebellum America," NBER Chapters, in: Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, pages 159-187 National Bureau of Economic Research, Inc.
  14. Claudia Goldin & Lawrence F. Katz, 1999. "The Returns to Skill in the United States across the Twentieth Century," NBER Working Papers 7126, National Bureau of Economic Research, Inc.
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Cited by:
  1. Aimee Chin & Chinhui Juhn & Peter Thompson, 2004. "Technical Change and the Wage Structure During the Second Industrial Revolution: Evidence from the Merchant Marine, 1865-1912," Working Papers, Florida International University, Department of Economics 0410, Florida International University, Department of Economics.
  2. Peter B. Meyer, 2005. "Turbulence, Inequality, and Cheap Steel," Working Papers, U.S. Bureau of Labor Statistics 375, U.S. Bureau of Labor Statistics.
  3. Jeremy Atack & Fred Bateman & Robert A. Margo, 2000. "Productivity in Manufacturing and the Length of the Working Day: Evidence from the 1880 Census of Manufactures," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 0045, Vanderbilt University Department of Economics.
  4. Thomas J. Holmes & Matthew F. Mitchell, 2008. "A theory of factor allocation and plant size," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 39(2), pages 329-351.
  5. Atack, Jeremy & Bateman, Fred & Margo, Robert A., 2002. "Part-Year Operation In Nineteenth-Century American Manufacturing: Evidence From The 1870 And 1880 Censuses," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 62(03), pages 792-809, September.
  6. Jeremy Atack & Fred Bateman & Robert A. Margo, 2001. "Part-Year Operation in 19th Century American Manufacturing: Evidence from the 1870 and 1880 Censuses," Economics Working Paper Archive wp_327, Levy Economics Institute.

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