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Coercive Contract Enforcement: Law and the Labor Market in Nineteenth Century Industrial Britain

Author

Listed:
  • Suresh Naidu
  • Noam Yuchtman

Abstract

British 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. (JEL J31, J41, K12, K31, N33, N43)

Suggested Citation

  • Suresh Naidu & Noam Yuchtman, 2013. "Coercive Contract Enforcement: Law and the Labor Market in Nineteenth Century Industrial Britain," American Economic Review, American Economic Association, vol. 103(1), pages 107-144, February.
  • Handle: RePEc:aea:aecrev:v:103:y:2013:i:1:p:107-44
    Note: DOI: 10.1257/aer.103.1.107
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Labour relations & textiles: addenda
      by pseudoerasmus in Pseudoerasmus on 2017-09-27 05:01:55

    Citations

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    Cited by:

    1. Committee, Nobel Prize, 2016. "Oliver Hart and Bengt Holmström: Contract Theory," Nobel Prize in Economics documents 2016-1, Nobel Prize Committee.
    2. Tyrefors Hinnerich, Bjorn & Lindgren, Erik & Pettersson-Lidbom, Per, 2017. "Political Power, Resistance to Technological Change and Economic Development: Evidence from the 19th century Sweden," Research Papers in Economics 2017:5, Stockholm University, Department of Economics.
    3. Daron Acemoglu & James A. Robinson, 2015. "The Rise and Decline of General Laws of Capitalism," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 3-28, Winter.
    4. Richard Hornbeck & Suresh Naidu, 2014. "When the Levee Breaks: Black Migration and Economic Development in the American South," American Economic Review, American Economic Association, vol. 104(3), pages 963-990, March.
    5. Alexander M. Danzer & Robert Grundke, 2016. "Coerced Labor in the Cotton Sector: How Global Commodity Prices (Don't) Transmit to the Poor," CESifo Working Paper Series 5937, CESifo Group Munich.
    6. Suresh Naidu & Yaw Nyarko & Shing-Yi Wang, 2014. "Worker Mobility in a Global Labor Market: Evidence from the United Arab Emirates," NBER Working Papers 20388, National Bureau of Economic Research, Inc.
    7. Oded Galor & Kaivan Munshi & Nicholas Wilson, 2013. "Inclusive Institutions and Long-Run Misallocation," Working Papers 2013-9, Brown University, Department of Economics.
    8. Ran Abramitzky, 2015. "Economics and the Modern Economic Historian," NBER Working Papers 21636, National Bureau of Economic Research, Inc.
    9. Timothy Halliday & Sumner La Croix, 2013. "Sons, Daughters, and Labor Supply in Early Twentieth-Century Hawaii," Working Papers 201318, University of Hawaii at Manoa, Department of Economics.
    10. Eduard Marinov, 2016. "The 2016 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 97-149.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913

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    1. Coercive Contract Enforcement: Law and the Labor Market in Nineteenth Century Industrial Britain (AER 2013) in ReplicationWiki

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