Piece-rates and prosperity: evidence from the late nineteenth-century tobacco industry

"This paper uses a new and detailed survey of cigar making employers and employees to investigate two related discrimination issues. First, were piece rate cigar makers – the skilled aristocracy of this industry – paid differently by gender? We find that they were, but that the differences can be more than explained by differences in characteristics such as age and experience. Second, we ask whether men were more likely than women to be promoted from the relatively lowly paid time rate section of the industry to become piece rate workers. Although, in line with work by Burnette and Goldin, we might expect firms to pay piece rate workers ”fairly” it is not at all obvious whether we would expect them to allocate workers to higher paid positions ”fairly”. In fact we find that they do: women were much less likely to be on piece rates, but given their characteristics they were as likely to make it as men. There was no glass ceiling in this industry. The reason that women are (much) less well paid is that age and experience mattered, and for some combination of societal expectations and personal preferences, women are more likely to spend time away from the labour market raising children, to the detriment of their earning potential."