IDEAS home Printed from https://ideas.repec.org/a/eee/exehis/v47y2010i1p112-125.html
   My bibliography  Save this article

Did firms cut nominal wages in a deflationary environment?: Micro-level evidence from the late 19th and early 20th century banking industry

Author

Listed:
  • Seltzer, Andrew

Abstract

This paper examines wage adjustment in the late 19th and early 20th centuries using personnel records from the Union Bank of Australia and Williams Deacon's Bank (England). During the period of this study there was steep and prolonged deflation. Firm-specific and industry-specific demand shocks also put downwards pressure on wages. Although it was common for individual wages at the banks to remain unchanged from year to year, wage cuts were very rare even for senior workers. Turnover at both banks was extremely low and, thus, despite flexibility in the wages of incoming workers, did not offset the effects of individual-level wage rigidity. Consequently real wages moved counter-cyclically.

Suggested Citation

  • Seltzer, Andrew, 2010. "Did firms cut nominal wages in a deflationary environment?: Micro-level evidence from the late 19th and early 20th century banking industry," Explorations in Economic History, Elsevier, vol. 47(1), pages 112-125, January.
  • Handle: RePEc:eee:exehis:v:47:y:2010:i:1:p:112-125
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0014-4983(09)00037-0
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 255-283.
    2. Fehr, Ernst & Goette, Lorenz, 2005. "Robustness and real consequences of nominal wage rigidity," Journal of Monetary Economics, Elsevier, vol. 52(4), pages 779-804, May.
    3. William T. Dickens & Lorenz Goette & Erica L. Groshen & Steinar Holden & Julian Messina & Mark E. Schweitzer & Jarkko Turunen & Melanie E. Ward, 2007. "How Wages Change: Micro Evidence from the International Wage Flexibility Project," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 195-214, Spring.
    4. Seltzer, Andrew J. & Simons, Kenneth L., 2001. "Salaries and Career Opportunities in the Banking Industry: Evidence from the Personnel Records of the Union Bank of Australia," Explorations in Economic History, Elsevier, vol. 38(2), pages 195-224, April.
    5. Huberman,Michael, 2010. "Escape from the Market," Cambridge Books, Cambridge University Press, number 9780521142663, April.
    6. Robert E. Hall, 1980. "Employment Fluctuations and Wage Rigidity," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 11(1, Tenth ), pages 91-142.
    7. Hanes, Christopher, 1993. "The Development of Nominal Wage Rigidity in the Late 19th Century," American Economic Review, American Economic Association, vol. 83(4), pages 732-756, September.
    8. Summers, Lawrence H, 1988. "Relative Wages, Efficiency Wages, and Keynesian Unemployment," American Economic Review, American Economic Association, vol. 78(2), pages 383-388, May.
    9. Lindbeck, Assar & Snower, Dennis J, 1988. "Cooperation, Harassment, and Involuntary Unemployment: An Insider-Outsider Approach," American Economic Review, American Economic Association, vol. 78(1), pages 167-188, March.
    10. Christopher Hanes, 2000. "Nominal Wage Rigidity and Industry Characteristics in the Downturns of 1893, 1929, and 1981," American Economic Review, American Economic Association, vol. 90(5), pages 1432-1446, December.
    11. Stephen Nickell & Glenda Quintini, 2003. "Nominal wage rigidity and the rate of inflation," Economic Journal, Royal Economic Society, vol. 113(490), pages 762-781, October.
    12. Sundstrom, William A., 1990. "Was There a Golden Age of Flexible Wages? Evidence from Ohio Manufacturing, 1892–1910," The Journal of Economic History, Cambridge University Press, vol. 50(02), pages 309-320, June.
    13. Gordon, Robert J, 1982. "Why U.S. Wage and Employment Behaviour Differs from That in Britain and Japan," Economic Journal, Royal Economic Society, vol. 92(365), pages 13-44, March.
    14. Christopher Hanes & John A. James, 2003. "Wage Adjustment Under Low Inflation: Evidence from U.S. History," American Economic Review, American Economic Association, vol. 93(4), pages 1414-1424, September.
    15. Mitchell, Daniel J B, 1985. "Wage Flexibility in the United States: Lessons from the Past," American Economic Review, American Economic Association, vol. 75(2), pages 36-40, May.
    16. George A. Akerlof & William R. Dickens & George L. Perry, 1996. "The Macroeconomics of Low Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 1-76.
    17. Seltzer, Andrew & Merrett, David T, 2000. "Personnel Policies at the Union Bank of Australia: Evidence from the 1888-1900 Entry Cohorts," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 573-613, October.
    18. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew Seltzer, 2013. "The impact of female employment on male salaries and careers: evidence from the English banking industry, 1890–1941," Economic History Review, Economic History Society, vol. 66(4), pages 1039-1062, November.
    2. Seltzer, Andrew, 2012. "The Impact of Female Employment on Male Wages and Careers: Evidence from the English Banking Industry, 1890-1941," IZA Discussion Papers 6663, Institute for the Study of Labor (IZA).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:exehis:v:47:y:2010:i:1:p:112-125. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/622830 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.