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Rising Wage Dispersion Across American Manufacturing Establishments, 1850-1880

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Author Info
Jeremy Atack () (Department of Economics, Vanderbilt University)
Fred Bateman (Terry College of Business, University of Georgia)
Robert A. Margo () (Department of Economics, Vanderbilt University)

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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 (for example, size, capital intensity, use of steam power, and so on) 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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File URL: http://www.vanderbilt.edu/econ/wparchive/workpaper/vu00-w36.pdf
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Paper provided by Department of Economics, Vanderbilt University in its series Working Papers with number 0036.

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Date of creation: Sep 2000
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Handle: RePEc:van:wpaper:0036

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N31 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - U.S.; Canada: Pre-1913
N61 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: Pre-1913

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  1. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 693-732, August. [Downloadable!] (restricted)
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  2. Brown, Martin & Philips, Peter, 1986. "Craft Labor and Mechanization in Nineteenth-Century American Canning," The Journal of Economic History, Cambridge University Press, vol. 46(03), pages 743-756, September. [Downloadable!]
  3. 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, vol. 56(03), pages 626-656, September. [Downloadable!]
  4. 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, vol. 107(1), pages 1-34, February. [Downloadable!] (restricted)
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  5. 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. [Downloadable!]
  6. 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. [Downloadable!] (restricted)
  7. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Kenneth L. Sokoloff & Georgia C. Villaflor, 1992. "The Market for Manufacturing Workers during Early Industrialization: The American Northeast, 1820 to 1860," NBER Chapters, in: Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, pages 29-65 National Bureau of Economic Research, Inc. [Downloadable!]
  9. Coelho, Philip R. P. & Shepherd, James F., 1976. "Regional differences in real wages: The United States, 1851-1880," Explorations in Economic History, Elsevier, vol. 13(2), pages 203-230, April. [Downloadable!] (restricted)
  10. 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, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  11. Goldin, Claudia & Sokoloff, Kenneth, 1982. "Women, Children, and Industrialization in the Early Republic: Evidence from the Manufacturing Censuses," The Journal of Economic History, Cambridge University Press, vol. 42(04), pages 741-774, December. [Downloadable!]
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  1. Thomas J. Holmes & Matthew F. Mitchell, 2003. "A theory of factor allocation and plant size," Staff Report 325, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  2. Jeremy Atack & Fred Bateman & Robert A. Margo, 2001. "Part-Year Operation in Nineteenth Century American Manufacturing: Evidence from the 1870 and 1880 Censuses," Working Papers 0106, Department of Economics, Vanderbilt University, revised Mar 2001. [Downloadable!]
    Other versions:
  3. Peter B. Meyer, 2005. "Turbulence, Inequality, and Cheap Steel," Working Papers 375, U.S. Bureau of Labor Statistics. [Downloadable!]
  4. Chin, Aimee & Juhn, Chinhui & Thompson, Peter, 2004. "Technical Change and the Wage Structure During the Second Industrial Revolution: Evidence from the Merchant Marine, 1865-1912," IZA Discussion Papers 1285, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Jeremy Atak & Fred Bateman & Robert A. Margo, 2001. "Part-Year Operation in 19th Century American Manufacturing: Evidence from the 1870 and 1880 Censuses," Macroeconomics 0105001, EconWPA. [Downloadable!]
    Other versions:
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