NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Coercive Contract Enforcement: Law and the Labor Market in 19th Century Industrial Britain

Suresh Naidu, Noam Yuchtman

NBER Working Paper No. 17051
Issued in May 2011
NBER Program(s):   DAE   LE   LS   POL

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.

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Document Object Identifier (DOI): 10.3386/w17051

Published: “Coercive Contract Enforcement : Law and the Labor Market in 19th Century Industrial Britain ” (with Noam Yuchtman) - American Economic Review Vol. 103(1) (February 201 3):107 - 144

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