American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Coercive Contract Enforcement: Law and the Labor Market in Nineteenth Century Industrial Britain
American Economic Review
vol. 103,
no. 1, February 2013
(pp. 107–44)
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. (JEL J31, J41, K12, K31, N33, N43)Citation
Naidu, Suresh, and Noam Yuchtman. 2013. "Coercive Contract Enforcement: Law and the Labor Market in Nineteenth Century Industrial Britain." American Economic Review, 103 (1): 107–44. DOI: 10.1257/aer.103.1.107Additional Materials
JEL Classification
- J31 Wage Level and Structure; Wage Differentials
- J41 Labor Contracts
- K12 Contract Law
- K31 Labor Law
- N33 Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: Pre-1913
- N43 Economic History: Government, War, Law, International Relations, and Regulation: Europe: Pre-1913