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Unemployment Risk and Compensating Differentials in New Jersey Manufacturing


  • Susan Averett
  • Howard Bodenhorn
  • Justas Staisiunas


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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    References listed on IDEAS

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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, 2012. "Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms," NBER Working Papers 18208, National Bureau of Economic Research, Inc.

    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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