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Abstract:
A central question concerning the economic motivation for the adoption of workers' compensation is the extent to which workers had access to their desired levels of private accident insurance around the turn of the century. If insurance were rationed, then workers' primary option would have been to use saving to protect against accident risk. We develop a theoretical model that suggests that workers' compensation, under this market condition, should have caused a reduction in households' precautionary saving. Our empirical test is based on a sample of over 7,000 households surveyed for the 1917-1919 Bureau of Labor Statistics Cost-of-Living study. Regression analysis suggests that households tended to save less, holding all else constant, if their states had workers' compensation in force. This finding, in concert with qualitative information about the insurance industry, provides some evidence that insurance companies were unable to effectively offer workplace accident insurance to a wide range of workers. By shifting the burden of insurance from workers to employers, workers' compensation benefited risk-averse workers who were rationed out of the insurance market, even if they paid for their more generous post-accident benefits through lower wages.

Abstract:
The Great Depression of the 1930s led contemporaries to worry that people hit by hard times would turn to crime in their efforts to survive. Franklin Roosevelt argued that the unprecedented and massive expansion in relief efforts “struck at the roots of crime� by providing subsistence income to needy families. After constructing a panel data set for 81 large American cities for the years 1930 through 1940, we estimated the impact of relief spending by all levels of government on crime rates. The analysis suggests that a ten percent increase in relief spending during the 1930s lowered property crime by roughly 1.5 percent. By limiting the amount of free time for relief recipients, work relief might have been more effective than direct relief at reducing crime. More generally, our results indicate that social insurance, which tends to be understudied in economic analyses of crime, should be more explicitly and more carefully incorporated into the analysis of temporal and spatial variations in criminal activity.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
**Revised version 2005**

This paper empirically examines the New Deal's impact on local economic activity, as measured by retail sales, during the 1930s. Using a recently-uncovered data set that describes over 30 federal New Deal spending, loan, and mortgage insurance programs across all U.S. counties from 1933 to 1939, we estimate how the various New Deal programs that were designed to accomplish different objectives influenced retail spending. Our empirical approach accounts for both the simultaneity between New Deal allocations and economic activity and the geographic spillovers that likely resulted when spending in one county may have affected the economies of its neighbors. We find that New Deal spending on public works tended to promote retail sales in both the county where the money was spent and in contiguous neighbors, while spending on work relief increased economic activity in the county where the money was spent but at the expense of neighboring counties. Agricultural spending that limited production was associated with lower retail spending. New Deal loan programs appear to have had little or a somewhat negative effect. Finally, increases in the value of mortgages insured by the Federal Housing Administration had a strong positive effect on local economic growth during the Depression.

Abstract:
This paper examines the impact of New Deal relief programs on demographic outcomes in major U.S. cities during the 1930s. A five-equation structural model is estimated that tests the effect of the relief spending on infant mortality, non-infant mortality, and fertility. For 111 cities for which data on relief spending during the 1930s were available, we collected annual data that matched the relief spending to the demographic variables, socioeconomic descriptions of the cities, and retail sales, which serve as a proxy for the level of economic activity. Relief spending directly lowered infant mortality rates to the degree that changes in relief spending can explain nearly one-third of the decline in infant mortality during the 1930s. Relief spending also raised general fertility rates. Our estimates suggest that the cost of saving an infant life during this period ranged from $2 to 4.5 million dollars (measured in year 2000 dollars). This range is similar to that found in modern studies of the effect of Medicaid and is within the range of market values of human life.

Abstract:
During the 1930s the federal government embarked upon an ambitious series of grant programs designed to counteract the Great Depression. Public works and relief programs combated unemployment by hiring workers and building social overhead capital while the Agricultural Adjustment Administration (AAA) sought to raise farm incomes by paying farmers not to produce. The amounts distributed varied widely across the country and potentially contributed to population shifts. We examine the extent to which New Deal spending affected domestic migration patterns in the second half of the 1930s. We estimate an aggregate discrete choice model, in which household heads choose among 466 economic subregions. The structural model allows us to decompose the effects of program spending on migration into three categories: the effect of spending on keeping households in their origin (retention), the effect of pulling non-migrants out of their origin (creation), and the effect of causing migrants to substitute away from an alternative destination (diversion). An additional dollar of public works and relief spending increased net migration into an area primarily by retaining the existing population and creating new migration into the county. Only a small share of the increase in net migration rate was caused by diversion of people who had already chosen to migrate. AAA spending contributed to net out migration, primarily by creating new out migrants and repelling potential in migrants. A counterfactual analysis that examines what would have happened had there been no New Deal spending during the 1930s suggests that the uneven distribution of New Deal public works and relief spending explains about twelve percent of the internal migration flows in the United States between 1935 and 1940. The uneven distribution of AAA spending accounted for about one percent.

migration, New Deal, discrete choice

Abstract:
Studies of the development of local economies often point to large-scale World War II military spending as a source of long-term economic growth, even though the spending declined sharply after the demobilization. We examine the longer term impact of the temporary war spending on county economies using a variety of measures of socioeconomic activity: including per capita retail sales, the extent of manufacturing, population growth, the share of women in the work force, housing values and ownership, and per capita savings over the period 1940-1950. We find that in the longer term counties receiving more war spending per capita during the war experienced extensive growth due to increases in population but not intensive growth, as the war spending had very small impacts on per capita measures of economic activity.

Abstract:
During the Great Depression, as today, migrants were accused of taking jobs and crowding relief rolls. At the time, protest concerned internal migrants rather than the foreign born. We investigate the effect of net migration on local labor markets, instrumenting for migrant flows to a destination with extreme weather events and variation in New Deal programs in typical sending areas. Migration had little effect on the hourly earnings of existing residents. Instead, migration prompted some residents to move away and others to lose weeks of work and/or access to relief jobs. Given the period's high unemployment, these lost work opportunities were costly to existing residents.

Abstract:
The American social welfare system was transformed during the 1930s. Prior to the New Deal public relief was administered almost exclusively by local governments. The administration of local public relief was widely thought to be corrupt. Beginning in 1933, federal, state, and local governments cooperatively built a larger social welfare system. While the majority of the funds for relief spending came from the federal government, the majority of administrative decisions were made at state and local levels. While New Dealers were often accused of playing politics with relief, social welfare system created by the New Deal (still largely in place today) is more often maligned for being bureaucratic than for being corrupt. We do not believe that New Dealers were motivated by altruistic motives when they shaped New Deal relief policies. Evidence suggests that politics was always the key issue. But we show how the interaction of political interests at the federal, state, and local levels of government created political incentives for the national relief administration to curb corruption by actors at the state and local level. This led to different patterns of relief spending when programs were controlled by national, rather than state and local officials. In the permanent social welfare system created by the Social Security Act, the national government pressed for the substitution of rules rather than discretion in the administration of relief. This, ultimately, significantly reduced the level of corruption in the administration of welfare programs.

Abstract:
We examine the importance of Roosevelt's 'relief, recovery, and reform' motives to the distribution of New Deal funds across over 3,000 U.S. counties, program by program. The major relief programs most closely followed Roosevelt's three R's. Other programs were tilted more in favor of areas with higher incomes. For all programs spending for political advantage in upcoming elections was a significant factor. Roosevelt's successful reelections were based on developing specific programs for a broad range of constituents, delivering on his stated goals, but also spending more at the margin for political purposes.

Abstract:
** Revised version 2005**

Using a recently-uncovered data set that describes over 30 federal New Deal spending, loan, and mortgage insurance programs across all U.S. counties from 1933 to 1939, this paper empirically examines the New Deal's impact on inter-county migration from 1930 to 1940. We construct a net migration measure for each county as the difference between the Census's reported population change from 1930 to 1940 and the natural increase in population (births minus infant deaths minus non-infant deaths) over the same period. Our empirical approach accounts for both the simultaneity between New Deal allocations and migration and the geographic spillovers that likely resulted when spending in one county may have affected the migration decisions of people in neighboring counties. We find that greater spending on relief and public works and a larger value of loans insured by the Federal Housing Administration were all associated with migration into counties where such money was allocated. The FHA's stimulus to the housing industry and large-scale public works projects explain most of the regional variation in migration rates across the country. New Deal loans and agricultural spending to take land out of production had negligible effects on migration patterns.

Abstract:
This paper examines the impact of New Deal relief programs on infant mortality, noninfant mortality and general fertility rates in major U.S. cities between 1929 and 1940. We estimate the effects using a variety of specifications and techniques for a panel of 114 cities for which data on relief spending during the 1930s were available. The significant rise in relief spending during the New Deal contributed to reductions in infant mortality, suicide rates, and some other causes of death, while contributing to increases in the general fertility rate. Estimates of the relationship between economic activity and death rates suggest that many types of death rates were pro-cyclical, similar to Ruhm's (2000) findings for the modern U.S.. Estimates of the relief costs associated with saving a life (adjusted for inflation) are similar to estimates found in studies of modern social insurance programs.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
Between 1869 and the early 1900s state governments regulated safety in mines and factories and reformed the liability for accidents. Reformers sought to reduce workers' risks and ensure that those involved in accidents received reasonable medical care and compensation for lost earnings. Yet large employers often wielded significant clout. This paper explores the extent to which large employers, measured by average number of employees, subverted the safety reform process, including the adoption of safety legislation, its scope, and the resources devoted to enforcement. The findings vary by industry. In coal mining large employers followed a defensive strategy, limiting the breadth of regulation, pressing for regulations that were enforced more against workers than against employers, and weakening enforcement. In manufacturing, on the other hand, safety regulations were introduced earlier in states with larger average establishment sizes. Reformers may have succeeded in imposing regulations on large manufacturing employers. However, the finding is also consistent with large firms working to raise rivals' costs and the analytical narratives suggest that manufacturing employers at times shaped the legislation to their benefit and that the regulations were often poorly enforced.

Abstract:
Market responses to legislative reforms often mitigate the expected gains that reformers promise in legislation. Contemporaries hailed workers' compensation as a boon to workers because it raised the amount of post-accident compensation paid to injured workers. Despite the large gains to workers, employers often supported the legislation. Analysis of several wage samples from the early 1900s shows that employers were able to pass a significant part of the added costs of higher post-accident compensation onto some workers in the form of reductions in wages. The size of the wage offsets, however, were smaller for union workers.

Abstract:
Dissatisfaction with the high transaction costs of compensating workers for their injuries led seven states in the 1910s to enact legislation requiring that employers insure their workers' compensation risks through exclusive state insurance funds. This paper traces the political-economic history of the success of compulsory state insurance in three states in the 1910s -- Minnesota, Ohio, and Washington. State insurance gained broad support in these states because a coalition of progressive legislators took control of their respective legislatures, bringing with them the idea that government had the unique ability to correct market imperfections. The political environment in which state insurance thrived in the 1910s provides important insights into the growth of government in the 1930s and 1960s. The major social insurance programs of the New Deal and the Great Society were widely supported at the time because the private market was seen as unable to solve a particular problem, such as unemployment compensation or poverty in old-age. This paper argues that the government's dramatic expansion after the 1932 federal election was not unprecedented; in fact, the ideological roots of New Deal activism were planted during the debates over compulsory state insurance and workers' compensation in the 1910s.

Abstract:
During the 1930s the federal government embarked upon an ambitious series of grant programs designed to counteract the Great Depression. The amounts distributed varied widely across the country and potentially contributed to population shifts. We estimate an aggregate discrete choice model, in which household heads choose among 466 economic subregions. The structural model allows us to decompose the effects of program spending on migration into three categories: the effect of spending on keeping households in their origin (retention), the effect of pulling non-migrants out of their origin (creation), and the effect of causing migrants to substitute away from an alternative destination (diversion). An additional dollar of public works and relief spending increased net migration into an area primarily by retaining the existing population and creating new migration into the county. Only a small share of the increase in net migration rate was caused by diversion of people who had already chosen to migrate. AAA spending contributed to net out migration, primarily by creating new out migrants and repelling potential in migrants. A counterfactual analysis suggests that the uneven distribution of New Deal spending explains about twelve percent of the internal migration flows in the United States between 1935 and 1940.

Abstract:
A central question concerning the economic motivation for the adoption of workers' compensation is the extent to which workers had access to their desired levels of private accident insurance around the turn of the century. If insurance were rationed then workers' primary option would have been to use savings to protect against accident risk. We develop a theoretical model that suggests that workers' compensation, under this market condition, should have caused a reduction in households' precautionary saving. Our empirical test is based on a sample of over 7000 households surveyed for the 1917- 1919 Bureau of Labor Statistics Cost-of-Living study. Regression analysis suggests that households tended to save less, holding all else constant, if their states had workers' compensation in force. This finding, in concert with qualitative information about the insurance industry, provides some evidence that insurance companies were unable to effectively offer workplace accident insurance to a wide range of workers. By shifting the burden of insurance from workers to employers, workers' compensation benefitted risk-averse workers who were rationed out of the insurance market, even if they paid for their more generous post-accident benefits through lower wages.

Abstract:
The adoption of workers' compensation in the 1910s, from a variety of perspectives, was a significant event in the economic, legal, and political history of the United States. The legislation represented the first instance of a widespread social insurance program in the United States, setting the stage for the later adoption of federal government programs for unemployment insurance, old-age pensions, and health insurance. In this paper, we show that the adoption of workers' compensation was not the result of employers' or workers' to secure benefits at the expense of the other group. Nor was the success of compensation legislation simply the outcome of Progressive Era social reformers' demands for protective legislation. Workers' compensation was enacted rapidly across the United States in the 1910s because the key economic interest groups with a stake in the legislation -- employers, workers, and insurance companies -- anticipated benefits from resolving an apparent first decade of the twentieth century, workplace accident risk rose, state legislatures adopted a series of employers' liability laws, and court decisions limited employers' defenses in liability suits, which all combined to substantially increase the uncertainty of the negligence liability system.

Abstract:
Although workers, employers, and insurance companies by 1910 supported the adoption of workers' compensation, they fiercely debated the specific features of the legislation. In this paper we examine how workers' compensation benefit levels were determined in the political process of forging compromises across interest groups, and even within individual groups. A quantitative analysis of the benefit levels in each state between the time of adoption and 1930 shows several important trends. Employers in dangerous industries effectively imposed limits on accident benefits, while organized labor and the commissions that administered the laws were instrumental in achieving higher expected benefit levels. Political reformers that gained control of state legislatures in the early twentieth century aided organized labor in achieving their goal of improving workers' compensation accident benefits. The paper also presents case-studies of the political struggle over benefits that occurred in" three states -- Ohio, Minnesota, and Missouri. These qualitative descriptions of the fight over benefit levels provide a more detailed picture of the political process through which workers' compensation was created because the cross-state quantitative study largely abstracts away from the political nuances that shaped workers' compensation legislation.

Abstract:
The American economy at the turn of the century offers an excellent opportunity to study the functioning of relatively unregulated labor markets. The essay surveys the economic history literature to determine how well labor markets operated in the early 1900s. After examining the mobility of workers, the integration of geographically dispersed labor markets of the extent of employer monopsony, we examine the extent to which workers received compensating differentials for workplace disamenities and the extent to which competition among employers reduced discrimination. During this period institutions like the company town company union, and share cropping developed. These institutions are reexamined to determine the extent to which they were exploitative or helped resolve problems with transactions costs. Finally, reformers pushed for legislation during the progressive era to correct perceived market failures. We examine the impact of progressive legislation and discuss the political economy of its passage.

Abstract:
During the New Deal the Roosevelt Administration dramatically expanded relief spending to combat extraordinarily high rates of unemployment. We examine the dynamic relationships between relief spending and local private labor markets using a new panel data set of monthly relief, private employment and private earnings for major U.S. cities in the 1930s. Impulse response functions derived from a panel VAR model that controls for time and city fixed effects show that a work relief shock in period t-1 led to a decline in private employment and a rise in private monthly earnings. The finding offers evidence consistent with contemporary employers' complaints that work relief made it more difficult to hire, even though work relief officials followed their stated policies to avoid affecting private labor markets directly. Meanwhile, negative shocks to private employment led to increases in work relief, consistent with Roosevelt's stated goal of using relief to promote relief and recovery.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
One of the most difficult problems in the social sciences is measuring the policy climate in societies. Prior to the 1930s the vast majority of labor regulations in the U.S. were enacted at the state level. In this paper we develop several summary measures of labor regulation that document the changes in labor regulation across states and over time during the Progressive Era. The measures include an Employer-Share-Weighted Index (ESWI) that weights regulations by the share of workers affected and builds up the overall index from 17 categories of regulation; the number of pages of laws; appropriations for spending on labor issues per worker; and two nonparametric COORDINATES that summarize locations in a policy space. We describe the pluses and minuses of the measures, how strongly they are correlated, and show the stories that they tell about the changes in labor regulation during the progressive era. We then provide preliminary evidence on the extent to which the labor regulation measures are associated with political and economic correlates identified as important in histories of industrial relations and labor markets.

Abstract:
We analyze the impact of the original means-tested Old Age Assistance (OAA) programs on the health of the elderly prior to the first Social Security pension payments. Before 1935 a number of states had enacted their own OAA laws. After 1935 the federal government began offering matching grants and thus stimulated the adoption of OAA programs by the states. A new panel data set of 75 cities for each year between 1929 and 1938 combines mortality rates for older age groups with three measures of the OAA programs, spending on non-age-specific relief and a rich set of correlates. The data are analyzed using difference-in-difference-in-difference and instrumental variables methods. Our results suggest that Old Age Assistance in the 1930s had little impact on the death rate of the elderly. Our sense is that the OAA programs in the 1930s transferred the elderly from general relief programs without necessarily increasing the resources available to them.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
Social welfare programs in the United States are designed to serve as safety nets for people in hard times, in contrast with the universal approach found in many other developed western nations. In a survey of Cliometric studies of social welfare programs in the U.S., we examine the variation in the safety net in the U.S. across states in the 20th century, the determinants of the variation, and its impact on socioeconomic outcomes. The U.S. has always displayed substantial variation in the extent of the safety net because the features of most public social welfare programs are and were determined by local and state governments, even after the federal government became involved. Differences across states persist strongly for typically a decade, although the persistence weakens with time, and there are some periods when federal intervention led to a re-ordering. The rankings of state benefits differs from program to program, and economic and political factors have different weights in determining benefit levels in panel data estimation of their effects. Variation in benefits across programs during the early 1900s had significant impact on labor markets, economic activity, family formation, death rates, and crime.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
In this article we test whether the introduction of social insurance has led to a reduction in private insurance purchases and precautionary saving by examining the introduction of workers' compensation. Our empirical analysis is based on the financial decisions of over 7,000 households surveyed for the 1917 19 Bureau of Labor Statistics Cost-of- Living that the presence of workers' compensation at least partially crowded out private accident insurance and led to a substantial reduction in precautionary saving. The introduction of workers' compensation caused private saving to fall by approximately 25 percent, with other factors held constant.

Abstract:
The American economy at the turn of the century offers an excellent opportunity to study the functioning of relatively unregulated labor markets. The essay surveys the economic history literature to determine how well labor markets operated in the early 1900s. After examining the mobility of workers, the integration of geographically dispersed labor markets, and a case study of the extent of employer monopsony, we examine the extent to which workers received compensating differentials for workplace disamenities and the extent to which competition among employers reduced discrimination. During this period institutions like the company town, company union, and share cropping developed. These institutions are re-examined to determine the extent to which they were exploitative or helped resolve problems with transactions costs. Finally, reformers pushed for legislation during the progressive era to correct perceived market failures. We examine the impact of progressive legislation and discuss the political economy of its passage.

Abstract:
We investigate the de facto operation of the employer liability system around the turn of the century with evidence on Michigan workers' nonfatal accident compensation from 1896 to 1903. The results show that the impact of the common-law defenses on accident payments was filtered through a settlement bargaining process affected by legal costs and private information. The probability of receiving compensation rose when the accident was severe enough to raise the worker's expected court award higher than his legal costs. Workers in larger firms and with greater tenure were also more likely to receive compensation. The fellow servant defense may have been less effective for larger employers while the contributory negligence defense was less effective against experienced workers. On the other hand employers might have been using accident payments as implicit fringe benefits to lower monitoring costs and to cut employee turnover.