Colorado College Working Paper 2009-05
27 Pages Posted: 16 Aug 2009
Date Written: August 14, 2009
We analyze the effects of a largely ignored 1885 legislative reform in Massachusetts requiring that firms provide workers the option of receiving weekly wage payments. Using an inter-temporal model of deferred compensation, we derive conditions on elasticities of labor supply that determine the effects of the reform on workers’ effective wage and utility. We then examine empirically the effects of the reform, using weekly data on mill workers in Lowell. Given the implications of our theoretical analysis, the empirical findings of positive wage and reform elasticities imply that the switch to weekly payment increased workers’ effective wage and well-being.
Keywords: elasticity, labor supply, wage, welfare, Massachusetts, wage frequency
JEL Classification: J22, J33, K31, I31
Suggested Citation: Suggested Citation
Redmount, Esther and Snow, Arthur and Warren, Ronald S., The Effect of Wage-Payment Reform on Workers’ Labor Supply and Welfare (August 14, 2009). Colorado College Working Paper 2009-05. Available at SSRN: https://ssrn.com/abstract=1452852 or http://dx.doi.org/10.2139/ssrn.1452852