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Unemployment Risk and Compensating Differentials in New Jersey Manufacturing

Author

Listed:
  • Susan Averett
  • Howard Bodenhorn
  • Justas Staisiunas

Abstract

We present evidence that low-skill workers received larger compensating differentials than more skilled workers when facing unanticipated unemployment in an era without unemployment insurance. Using information from surveys of New Jersey workers conducted during the 1880s, we test the theory of compensating wage differentials. We find that workers who faced a higher probability of predictable unemployment received compensating differentials and that the size of the differential differed across industries and skill levels. With few firm- or industry-specific skills, unskilled workers were less subject to "informational capture" than skilled workers who had more but less easily transferable human capital. (JEL N31) Copyright 2005, Oxford University Press.

Suggested Citation

  • Susan Averett & Howard Bodenhorn & Justas Staisiunas, 2005. "Unemployment Risk and Compensating Differentials in New Jersey Manufacturing," Economic Inquiry, Western Economic Association International, vol. 43(4), pages 734-749, October.
    • Handle: RePEc:oup:ecinqu:v:43:y:2005:i:4:p:734-749
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    File URL: http://hdl.handle.net/10.1093/ei/cbi051
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    Citations

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    Cited by:

    1. Sarah Hamersma & Carolyn Heinrich & Peter Mueser, 2014. "Temporary Help Work: Earnings, Wages, and Multiple Job Holding," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(1), pages 72-100, January.
    2. Howard Bodenhorn, 2017. "Finance and Growth: Household Savings, Public Investment, and Public Health in Late Nineteenth-Century New Jersey," NBER Working Papers 23430, National Bureau of Economic Research, Inc.
    3. Jennifer Brown & David A. Matsa, 2016. "Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms," Journal of Finance, American Finance Association, vol. 71(2), pages 507-550, April.
    4. Howard Bodenhorn, 2019. "Were Nineteenth‐Century Industrial Workers Permanent Income Savers?," Southern Economic Journal, John Wiley & Sons, vol. 85(4), pages 1286-1310, April.
    5. Keith A. Bender & Hosne Mridha, 2011. "The Effect of Local Area Unemployment on Compensating Wage Differentials for Injury Risk," Southern Economic Journal, John Wiley & Sons, vol. 78(2), pages 287-307, October.

    More about this item

    JEL classification:

    • N31 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: Pre-1913

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