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Rising Wage Dispersion Across American Manufacturing Establishments, 1850-1880

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  • Jeremy Atack
  • Fred Bateman
  • Robert A. Margo

Abstract

We use data from the manuscript censuses of manufacturing for 1850, 1860, 1870, and 1880 to study the dispersion of average monthly wages across establishments. We find a marked increased in wage inequality over the period, an increase that cannot be explained by biases in the data or changes in census enumeration procedures. Based on log wage regressions on establishment characteristics we compute a decomposition of the change in wage inequality between 1850 and 1880. The decomposition reveals that changes in wage structure' the regression coefficients and the standard error of the residuals largely offset each: changes in the coefficients produced a reduction in wage inequality, while residual inequality increased. Most of the rise in wage inequality can be attributed to an increased concentration of employment in large establishments, which paid relatively low wages. We present indirect evidence that the negative effect of size on wages reflected differences in skill composition: workforces in large establishments were less skilled than in small establishments.

Suggested Citation

  • Jeremy Atack & Fred Bateman & Robert A. Margo, 2000. "Rising Wage Dispersion Across American Manufacturing Establishments, 1850-1880," NBER Working Papers 7932, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7932
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    References listed on IDEAS

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    1. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
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    Cited by:

    1. Aimee Chin & Chinhui Juhn & Peter Thompson, 2004. "Technical Change and the Wage Structure During the Second Industrial Revolution: Evidence from the Merchant Marine, 1865-1912," NBER Working Papers 10728, National Bureau of Economic Research, Inc.
    2. Thomas J. Holmes & Matthew F. Mitchell, 2008. "A theory of factor allocation and plant size," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 329-351.
    3. Atack, Jeremy & Bateman, Fred & Margo, Robert A., 2003. "Productivity in manufacturing and the length of the working day: evidence from the 1880 census of manufactures," Explorations in Economic History, Elsevier, vol. 40(2), pages 170-194, April.

    More about this item

    JEL classification:

    • N61 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: Pre-1913
    • N31 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: Pre-1913

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