Unemployment Risk and Compensating Differential in Late-Nineteenth Century New Jersey Manufacturing

35 Pages Posted: 21 Sep 2003

See all articles by Susan L. Averett

Susan L. Averett

Lafayette College - Department of Economics & Business

Howard Bodenhorn

National Bureau of Economic Research (NBER); Clemson University - College of Business and Behavioral Science

Justas Staisiunas

Lafayette College - Department of Economics & Business

Date Written: September 2003

Abstract

In this paper we test for the existence of compensating differentials for unemployment risk in an era before unemployment insurance. Using information gathered from manufacturing worker surveys conducted during the 1880s in New Jersey, we find that workers who faced higher probabilities of predictable unemployment spells received a small compensating differential. Low-skill laborers and operatives were partially compensated for unemployment risks; skilled craftsmen were not. Although workers were not fully compensated for the unemployment risks they accepted, the results are of interest because most previous writers, dating back to Adam Smith, doubted the existence of compensating differentials in manufacturing. Differentials are typically believed to arise in employments with pronounced seasonal components, such as agriculture and construction.

Suggested Citation

Averett, Susan and Bodenhorn, Howard and Staisiunas, Justas, Unemployment Risk and Compensating Differential in Late-Nineteenth Century New Jersey Manufacturing (September 2003). NBER Working Paper No. w9977. Available at SSRN: https://ssrn.com/abstract=447265

Susan Averett

Lafayette College - Department of Economics & Business ( email )

Easton, PA 18042
United States
610-250-5307 (Phone)
610-250-8961 (Fax)

Howard Bodenhorn (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Clemson University - College of Business and Behavioral Science ( email )

Clemson, SC 29631
United States

Justas Staisiunas

Lafayette College - Department of Economics & Business ( email )

Easton, PA 18042
United States

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