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Coercive contract enforcement: law and the labor market in nineteenth century industrial Britain

Naidu, Suresh and Yuchtman, Noam (2013) Coercive contract enforcement: law and the labor market in nineteenth century industrial Britain. American Economic Review, 103 (1). pp. 107-144. ISSN 0002-8282

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Identification Number: 10.1257/aer.103.1.107

Abstract

British Master and Servant law made employee contract breach a criminal offense until 1875. We develop a contracting model generating equilibrium contract breach and prosecutions, then exploit exogenous changes in output prices to examine the effects of labor demand shocks on prosecutions. Positive shocks in the textile, iron, and coal industries increased prosecutions. Following the abolition of criminal sanctions, wages differentially rose in counties that had experienced more prosecutions, and wages responded more to labor demand shocks. Coercive contract enforcement was applied in industrial Britain; restricted mobility allowed workers to commit to risk-sharing contracts with lower, but less volatile, wages.

Item Type: Article
Official URL: https://www.aeaweb.org/journals/aer
Additional Information: © 2013 American Economic Association
Divisions: Management
Subjects: K Law > KD England and Wales
JEL classification: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.
J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
K - Law and Economics > K1 - Basic Areas of Law > K12 - Contract Law
K - Law and Economics > K3 - Other Substantive Areas of Law > K31 - Labor Law
N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Income, and Wealth > N33 - Economic History: Labor and Consumers, Demography, Education, Health, Income and Wealth: Europe: Pre-1913
N - Economic History > N4 - Government, War, Law, and Regulation > N43 - Europe: Pre-1913
Sets: Departments > Management
Date Deposited: 04 Jan 2019 14:24
Last Modified: 20 May 2019 01:35
URI: http://eprints.lse.ac.uk/id/eprint/91505

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