TY  - JOUR
AU  - Raff,Daniel M.G.
AU  - Summers,Lawrence H.
TI  - Did Henry Ford Pay Efficiency Wages?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2101
PY  - 1989
Y2  - October 1989
UR  - http://www.nber.org/papers/w2101
L1  - http://www.nber.org/papers/w2101.pdf
N1  - Author contact info:
Daniel Raff
Department of Management
The Wharton School
University of Pennsylvania
Philadelphia, PA 19104-6370
Tel: 215/898-3804
Fax: 215/898-0401
E-Mail: raff@wharton.upenn.edu

Lawrence H. Summers
Harvard Kennedy School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9322
Fax: 617/495-0436
E-Mail: lhs@harvard.edu
AB  - This paper examines Henry Ford's introduction of the five-dollar day in 1914 in an effort to evaluate the relevance of efficiency wage theories of wage and employment determination. Our general conclusion is that the Ford experience is strongly supportive of the relevance of these theories. Ford's decision to dramatically increase wages is most plausibly portrayed as the consequence of labor problems of the kind stressed by efficiency wage theorists. The structure of the five dollar day program is consistent with the predictions of efficiency wage theories. There is vivid evidence that the five-dollar day resulted in substantial queues for Ford jobs. Finally, significant increases in productivity and profits at Ford accompanied the introduction of the five-dollar day.
ER  -