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Did American Welfare Capitalists Breach Their Implicit Contracts during the Great Depression? Preliminary Findings from Company-Level Data

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  • Chiaki Moriguchi

Abstract

It has been claimed that American employers' experiments in private welfare capitalism collapsed during the Great Depression, giving place to the welfare state and industrial unionism. Recent studies, however, reveal considerable differences in experience across firms. The author of this study, who characterizes private welfare capitalism as a set of human resource management practices constituting an implicit contract equilibrium, tests the implications of implicit contract theory using data from fourteen leading manufacturing firms. The repudiation of implicit contracts, she finds, was positively correlated with the severity of the depression's impact experienced by firms and negatively correlated with the effectiveness of “internal enforcement mechanisms†instituted by firms. Furthermore, she finds that greater breaches of implicit contracts were associated with greater employee support for industrial unions and more explicit employment contracts concluded under the New Deal. A comparative case study complements the quantitative analysis by exploring internal dynamics.

Suggested Citation

  • Chiaki Moriguchi, 2005. "Did American Welfare Capitalists Breach Their Implicit Contracts during the Great Depression? Preliminary Findings from Company-Level Data," ILR Review, Cornell University, ILR School, vol. 59(1), pages 51-81, October.
    • Handle: RePEc:sae:ilrrev:v:59:y:2005:i:1:p:51-81
    DOI: 10.1177/001979390505900104
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    References listed on IDEAS

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    Cited by:

    1. Victor Hiller, 2010. "Workers' Behavior And Labor Contract: An Evolutionary Approach," Metroeconomica, Wiley Blackwell, vol. 61(1), pages 152-179, February.
    2. Bruce E. Kaufman, 2014. "The origins, evolution, and current status of human resource management in the United States," Chapters, in: Bruce E. Kaufman (ed.), The Development of Human Resource Management Across Nations, chapter 18, pages 461-492, Edward Elgar Publishing.
    3. Joshua L. Rosenbloom & William A. Sundstrom, 2009. "Labor-Market Regimes in U.S. Economic History," NBER Working Papers 15055, National Bureau of Economic Research, Inc.
    4. Tom Nicholas, 2023. "Status and mortality: Is there a Whitehall effect in the United States?," Economic History Review, Economic History Society, vol. 76(4), pages 1191-1230, November.
    5. Bruce E. Kaufman, 2012. "Wage Theory, New Deal Labor Policy, and the Great Depression: Were Government and Unions to Blame?," ILR Review, Cornell University, ILR School, vol. 65(3), pages 501-532, July.
    6. Shingo Ishiguro, 2016. "Macroeconomic Dynamics with Limited Commitment in Financial and Labor Contracts," Discussion Papers in Economics and Business 16-25, Osaka University, Graduate School of Economics.
    7. Bruce E. Kaufman (ed.), 2014. "The Development of Human Resource Management Across Nations," Books, Edward Elgar Publishing, number 14408.

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