TY  - JOUR
AU  - Moriguchi,Chiaki
TI  - Did American Welfare Capitalists Breach their Implicit Contracts? Preliminary Findings from Company-level Data, 1920-1940
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9868
PY  - 2003
Y2  - July 2003
UR  - http://www.nber.org/papers/w9868
L1  - http://www.nber.org/papers/w9868.pdf
N1  - Author contact info:
Chiaki Moriguchi
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL  60208-2600
Tel: 847/491-8237
Fax: 847/491-7001
E-Mail: cmoriguchi@gmail.com
AB  - It has been claimed that American employers' experiments in private welfare capitalism collapsed during the Great Depression and were subsequently replaced by the welfare state and industrial unionism. However, recent studies reveal considerable differences among firms, adding complex nuances to a simple story of discontinuation. Characterizing private welfare capitalism as a set of personnel practices that constituted an implicit contract equilibrium, this paper compiles data of fourteen manufacturing firms and tests the implications of implicit contract theory. It finds that the repudiation of implicit contracts was positively correlated with the severity of the depression experienced by a firm and negatively correlated with the effectiveness of internal enforcement mechanisms. It also shows that a firm with more repudiation experienced greater change in labor-management relations under the New Deal regime. A comparative case study complements the findings by providing quantitative evidence.
ER  -