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Wage Inequality in American Manufacturing, 1820–1940: New Evidence

In: The Economic History of American Inequality: New Evidence and Perspectives

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  • Jeremy Atack
  • Robert A. Margo
  • Paul W. Rhode

Abstract

The consensus view among economic historians is that wage inequality in American manufacturing followed an inverted-U path from the early nineteenth century until just before World War Two. The previous literature, however, has been unable to fully document this path over time, or fully assess the role of explanatory factors such as changes in firm organization and technology. We provide fresh evidence that allow us to better document the inverted-U and its causes. In the first part of the paper, we use the U.S. Department of Labor’s 1899 “Hand and Machine Labor” study to argue that wage inequality within manufacturing establishments rose over the nineteenth century, primarily because of increasing division of labor In the second part, we use data for Massachusetts from state reports to construct a new time series on wage inequality among production workers, which declined from the early 1890s to the late 1930s, mainly because of compression in the left tail of the distribution. Analysis of industry panel data suggest that electrification was the main factor behind the compression.
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Suggested Citation

  • Jeremy Atack & Robert A. Margo & Paul W. Rhode, 2024. "Wage Inequality in American Manufacturing, 1820–1940: New Evidence," NBER Chapters, in: The Economic History of American Inequality: New Evidence and Perspectives, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14840
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    References listed on IDEAS

    as
    1. Robert A. Margo, 2000. "Wages and Labor Markets in the United States, 1820-1860," NBER Books, National Bureau of Economic Research, Inc, number marg00-1.
    2. Goldin, Claudia & Katz, Lawrence F., 2000. "Education and Income in the Early Twentieth Century: Evidence from the Prairies," The Journal of Economic History, Cambridge University Press, vol. 60(3), pages 782-818, September.
    3. Claudia Goldin & Hugh Rockoff, 1992. "Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel," NBER Books, National Bureau of Economic Research, Inc, number gold92-1.
    4. Atack, Jeremy & Bateman, Fred & Margo, Robert A., 2004. "Skill Intensity and Rising Wage Dispersion in Nineteenth-Century American Manufacturing," The Journal of Economic History, Cambridge University Press, vol. 64(1), pages 172-192, March.
    5. Gray, Rowena, 2013. "Taking technology to task: The skill content of technological change in early twentieth century United States," Explorations in Economic History, Elsevier, vol. 50(3), pages 351-367.
    6. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins of Technology-Skill Complementarity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 693-732.
    7. Atack, Jeremy & Margo, Robert A. & Rhode, Paul W., 2022. "“Mechanization Takes Command?”: Powered Machinery and Production Times in Late Nineteenth-Century American Manufacturing," The Journal of Economic History, Cambridge University Press, vol. 82(3), pages 663-689, September.
    8. Claudia Goldin & Kenneth Sokoloff, 1984. "The Relative Productivity Hypothesis of Industrialization: The American Case, 1820 to 1850," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(3), pages 461-487.
    9. Devine, Warren D., 1983. "From Shafts to Wires: Historical Perspective on Electrification," The Journal of Economic History, Cambridge University Press, vol. 43(2), pages 347-372, June.
    10. Claudia Goldin & Lawrence F. Katz, 1999. "The Returns to Skill in the United States across the Twentieth Century," NBER Working Papers 7126, National Bureau of Economic Research, Inc.
    11. David Autor & Claudia Goldin & Lawrence F. Katz, 2020. "Extending the Race between Education and Technology," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 347-351, May.
    12. Jeremy Atack & Robert A. Margo & Paul W. Rhode, 2019. ""Automation" of Manufacturing in the Late Nineteenth Century: The Hand and Machine Labor Study," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 51-70, Spring.
    13. Broadberry, Stephen N. & Irwin, Douglas A., 2006. "Labor productivity in the United States and the United Kingdom during the nineteenth century," Explorations in Economic History, Elsevier, vol. 43(2), pages 257-279, April.
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    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
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • N61 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: Pre-1913
    • N62 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: 1913-

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