Two opposing views of the antebellum economy are tested. One is
that aggregate economic activity was severely diminished and that
unemployment was substantial and prolonged during several downturns.
The alternative interpretation is that antebellum fluctuations were more
apparent than real; nominal wages, not labor quantities, did most of the
adjusting. We analyze data on real wages for laborers, artisans, and clerks
across four regions (Northeast, North Central, South Atlantic, and South
Central) during 1821 to 1856. Various time-series econometric methods
reveal that shocks to real wages persisted even five years after an
innovation, but that their impact eventually vanished. The persistence of
shocks was less for agricultural labor than for other occupations, less for
growing regions than for more mature ones, less for unskilled than for
skilled labor, and probably less before 1860 than after. Although nominal
wages and prices never strayed far from each other over the long run, the
persistence of shocks was considerable during the 1821 to 1856 period.
We, therefore, find evidence to support the first view of the antebellum
economy, although the degree of unemployment in cities and industrial
towns remains unknown.
*Published: This paper was subsequently published as Wages, Prices, and Labor Markets before the Civil War, Claudia Goldin, Robert A. Margo, in NBER book Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel (1992)
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