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Rising Wage Dispersion Across American Manufacturing Establishments, 1850-1880

Author

Listed:
  • Jeremy Atack

    (Department of Economics, Vanderbilt University)

  • Fred Bateman

    (Terry College of Business, University of Georgia)

  • Robert A. Margo

    (Department of Economics, Vanderbilt University)

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 (for example, size, capital intensity, use of steam power, and so on) 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," Vanderbilt University Department of Economics Working Papers 0036, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:0036
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    References listed on IDEAS

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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, June.
    3. Atack, Jeremy & Bateman, Fred & Margo, Robert A., 2002. "Part-Year Operation In Nineteenth-Century American Manufacturing: Evidence From The 1870 And 1880 Censuses," The Journal of Economic History, Cambridge University Press, vol. 62(3), pages 792-809, September.
    4. 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.
    5. 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.
    6. Peter B. Meyer, 2005. "Turbulence, Inequality, and Cheap Steel," Working Papers 375, U.S. Bureau of Labor Statistics.
    7. Jeremy Atak & Fred Bateman & Robert A. Margo, 2001. "Part-Year Operation in 19th Century American Manufacturing: Evidence from the 1870 and 1880 Censuses," Macroeconomics 0105001, University Library of Munich, Germany.

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    JEL classification:

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

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