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Did American Welfare Capitalists Breach their Implicit Contracts? Preliminary Findings from Company-level Data, 1920-1940

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  • Chiaki Moriguchi

Abstract

It has been claimed that American employers' experiments in private welfare capitalism collapsed during the Great Depression and were subsequently replaced by the welfare state and industrial unionism. However, recent studies reveal considerable differences among firms, adding complex nuances to a simple story of discontinuation. Characterizing private welfare capitalism as a set of personnel practices that constituted an implicit contract equilibrium, this paper compiles data of fourteen manufacturing firms and tests the implications of implicit contract theory. It finds that the repudiation of implicit contracts was positively correlated with the severity of the depression experienced by a firm and negatively correlated with the effectiveness of internal enforcement mechanisms. It also shows that a firm with more repudiation experienced greater change in labor-management relations under the New Deal regime. A comparative case study complements the findings by providing quantitative evidence.

Suggested Citation

  • Chiaki Moriguchi, 2003. "Did American Welfare Capitalists Breach their Implicit Contracts? Preliminary Findings from Company-level Data, 1920-1940," NBER Working Papers 9868, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9868
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    References listed on IDEAS

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    Cited by:

    1. Pierre Cahuc, 2005. "Le difficile retour en emploi des seniors," Revue Française d'Économie, Programme National Persée, vol. 20(1), pages 3-56.

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    More about this item

    JEL classification:

    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • N82 - Economic History - - Micro-Business History - - - U.S.; Canada: 1913-

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