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The economic effects of the 1920 eight-hour working day reform in Sweden

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  • Erik Bengtsson
  • Jakob Molinder

Abstract

In 1920, the working day in Swedish manufacturing and services was cut from 10 to 8 hours without wages being cut correspondingly. Since workers demanded and got the same daily wage working 8 hours as they had with 10, real hourly wages increased dramatically; they were about 50% higher in 1921–1922 than they had been in 1919. This is the largest wage push in Swedish history, and this paper studies the consequences for profits, investments, capital intensity and unemployment. In traded manufacturing employers responded by increasing capital intensity and did not compensate for rising wages by raising prices, which led to a combination of jobless growth and low profit rates in the 1920s. Firms in non-traded manufacturing and services could raise prices and conserve profitability to a higher degree. In total, the effects of the reform were pro-labour. We discuss the implications for our understanding of interwar wages and employment, the literature on the decrease in inequality found in most industrial countries around 1920 and the rise of the ‘Swedish model’ in the 1920s and 1930s.

Suggested Citation

  • Erik Bengtsson & Jakob Molinder, 2017. "The economic effects of the 1920 eight-hour working day reform in Sweden," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 65(2), pages 149-168, May.
  • Handle: RePEc:taf:sehrxx:v:65:y:2017:i:2:p:149-168
    DOI: 10.1080/03585522.2017.1290673
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    File URL: http://hdl.handle.net/10.1080/03585522.2017.1290673
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    References listed on IDEAS

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    1. Albrecht Ritschl & Monique Ebell, 2007. "Real Origins of the Great Depression: Monopoly Power, Unions and the American Business Cycle in the 1920s," 2007 Meeting Papers 712, Society for Economic Dynamics.
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    Cited by:

    1. Enflo, Kerstin & Karlsson, Tobias & Molinder, Jakob, 2018. "The Power Resource Theory Revisited: What Explains the Decline in Industrial Conflicts in Sweden?," CEPR Discussion Papers 13130, C.E.P.R. Discussion Papers.
    2. Giacomo Gabbuti, 2018. "Labour Shares and Income Inequality: Insights from Italian Economic History, 1895-2015," HHB Working Papers Series 13, The Historical Household Budgets Project.
    3. Giacomo Gabbuti, 2020. "A Noi! Income Inequality and Italian Fascism: Evidence from Labour and Top Income Shares," Oxford Economic and Social History Working Papers _177, University of Oxford, Department of Economics.
    4. Kerstin Enflo & Tobias Karlsson, 2019. "From conflict to compromise: the importance of mediation in Swedish work stoppages 1907–1927," European Review of Economic History, Oxford University Press, vol. 23(3), pages 268-298.
    5. Bengtsson, Erik & Prado, Svante, 2019. "The rise of the middle class: The income gap between salaried employees and workers in Sweden, 1830-1935," Lund Papers in Economic History 186, Lund University, Department of Economic History.

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