The Evolution of Unemployment Relief in Great Britain Unemployment was a major cause of economic ... more The Evolution of Unemployment Relief in Great Britain Unemployment was a major cause of economic insecurity for British workers throughout the nineteenth century. Business-cycle downturns occurred every five to eight years, and more than one-quarter of the years from 1834 to 1911 were plagued by high levels of cyclical unemployment. Even during prosperous years, many workers in seasonal or casual occupations experienced prolonged periods of unemployment. The average worker's savings were modest. A spell of unemployment longer than a few weeks led most manual workers to experience "acute financial" distress, forcing them to turn to other sourcestypically local government or charities-for income assistance. 1 Relatively little has been written about unemployment relief during the period between the passage of the Poor Law Amendment Act in 1834 an d the adoption of national unemployment insurance in 1911. This study is an attempt to help fill the gap in the literature. It examines the changing roles played by poor relief, private charity, trade unions, and public employment in the lives of the urban unemployed during cyclical downturns from 1834 to 1911. The story that emerges offers no support for a "Whig theory of welfare." Public assistance for the unemployed was more generous, and more certain, from 1834 to 1870 than it was from 1870
This introductory chapter provides an overview of economic insecurity. Economic insecurity can be... more This introductory chapter provides an overview of economic insecurity. Economic insecurity can be defined as “the risk of economic loss faced by workers and households as they encounter the unpredictable events of life.” Insecurity is associated with income loss caused by “adverse events” such as unemployment and poor health; the negative impact of these shocks on households depends “on the surrounding institutions that regulate risk.” Indeed, the extent to which workers suffered financial distress from income shocks depended in large part on the social safety net—the existing institutions of public and private assistance. For nineteenth-century England and Wales, the main social welfare institution was the Poor Law, a system of public relief administered and financed at the local level. The Old Poor Law of 1795–1834 was “a welfare state in miniature,” relieving the elderly, widows, children, the sick, the disabled, and the unemployed and underemployed.
pauperism rates, and regional differences in workers' reliance on the poor law. The paper the... more pauperism rates, and regional differences in workers' reliance on the poor law. The paper then examines the implications of these results for the debate over national old age pensions in the decades before the adoption of the Old Age Pension Act. T he standard of living of English workers increased sharply during the second half of the nineteenth century. Real weekly earnings for the average manual worker doubled from 1854-6 to 1904-6, and even agricultural labourers, the lowest paid adult male workers, experienced an increase in real earnings of 73 per cent during this period.2 Concurrent with the rise in incomes was a fall in pauperism rates. The share of the population of England and Wales receiving poor relief, as measured in the official government statistics, fell from 5.1 per cent in 1850-6 to 2.5 per cent in 1900-6.3 To many contemporary observers, the increase in wages, combined with the halving of pauperism rates, indicated that poverty was no longer a major issue in late Victorian England. However, two government studies conducted in the early 1890s found that, while pauperism rates were indeed low for children and prime age adults, the share of persons aged 65 and over receiving poor relief was quite high- 19.5 per cent using the 'official' one-day count, and 29.3 per cent using a 12-month count.4 These data, along with the 1895 Report of the Royal Commis sion on the Aged Poor and two detailed studies of poverty among the elderly by Charles Booth, gave impetus to the movement for government provision of pen sions for the elderly which was to culminate in the adoption of the Old Age Pension
Historians have long acknowledged that London, because of its enormous size and rapidly growing d... more Historians have long acknowledged that London, because of its enormous size and rapidly growing demand for labor, acted as a powerful magnet for migrants from throughout southern England. However, while there is a large literature documenting the flow of migrants to London, there have been surprisingly few attempts to determine the consequences of this migration for southern labor markets. This article attempts to redress the imbalance in the literature by examining the influence of London on agricultural labor markets during the nineteenth century. In particular, the article examines the effect of distance from London on wage rates in southern England at various points in time, and the effect of labor market conditions in London on short-run changes in agricultural wage rates. I find that there was a significant London wage effect throughout the nineteenth century and that annual changes in agricultural wage rates were largely driven by London wage and employment rates. The results of the article show that London and the rural South and East of England formed a wellfunctioning regional labor market throughout the nineteenth century. The analysis of agricultural wage data in the article complements the previous analyses of migration trends by historians. While most historians who have examined the relationship between rural and urban labor markets have relied almost exclusively on migration data, the results presented here show that this relationship can also be analyzed using wage data 1. In fact, the use of wage data is in many ways more attractive than the use of migration data. Migration data for England are not available before 1851, and even then they are available only at the county level of aggregation. Moreover, because only decadal migration rates can be constructed using census data, it is not possible to examine short-run responses by rural labor markets to economic conditions in London. In contrast, cross sections of agricultural wage data exist for various years throughout the nineteenth century, and large cross sections of wage data at the parish/district level of aggregation are available for 1832, 1894-98, and 1903. Moreover, annual wage series for agricultural laborers and London building laborers can be constructed for the second half of the century and used to determine the effects of labor market conditions in London on annual changes in agricultural wages. Thus, one can get a much better idea of the influence of London on rural labor markets using wage rates than migration rates. Historians have also shown that distance had a significant deterrent effect on migration in Victorian Britain-the greater the distance between origin and destination, the smaller the migration flow, other things being equal. Unfortunately, it is difficult to determine whether the deterrent effect of distance declined over time using migration data. This is an important issue, since many historians have argued that improvements in transportation and communications in the mid-nineteenth century must have sharply reduced the costs of migration and therefore reduced the deterrent effect of distance. I show in my article that this hypothesis can be tested by examining the trend in the effect of distance from London on wage rates. The magnitude of the wage gradient around London is a measure of the deterrent effect of distance on migration. By estimating the London wage effect at several points in time during the century, it is possible to get some idea of the effect of transportation improvements on the deterrent effect of distance.
This essay on labor economics examines neoclassical theory's rise to ascendancy following the sec... more This essay on labor economics examines neoclassical theory's rise to ascendancy following the second World War, with a secondary focus on the relative decline but continued influence of institutionalist economic theory. The authors describe the evolution of institutional and neoclassical theory from the late nineteenth to mid-twentieth centuries, examine some early intellectual debates between the two camps, briefly describe the work of neoclassical labor economics pioneers, and look at major developments over the past 30 years. They argue that neoclassical economists' increasing intellectual breadth and influence in public policy have led them to pay closer attention to issues that have long been of concern to institutionalists and "neoinstitutionalists." T he field of labor economics has changed dramatically in the postwar period. At the end of the second World War, labor economics was dominated by a group of academics who, while knowledgeable of neoclassical theory, had their roots in the institutionalist approach to economics. However, the next thirty years saw the rise to dominance of an approach to labor economics that was rooted in neoclassical economic theory. The same period saw a decline, within economics departments, of institutionalist-based labor economics. The
This book began in 1981 as a Ph.D. dissertation at the University of Wisconsin and has continued ... more This book began in 1981 as a Ph.D. dissertation at the University of Wisconsin and has continued to evolve and expand ever since. I have accumulated many debts in the process of writing the book, and I am happy to be able to thank those people who have generously taken the time to improve it. My greatest debt is to Jeffrey Williamson, who supervised my dissertation, and who has helped in every stage of the development of this work. Over the past decade Jeff has been my teacher, my critic, and my friend. He has consistently helped me to clarify my thinking and insisted that I find data to support my hypotheses. Without his enthusiasm and encouragement this book would never have been written. I also owe a major debt to Peter Lindert. Peter played an important role in the early stages of the project, helping me to formulate my ideas and directing me to the data necessary to test them. Since then he has read several versions of almost every chapter of the book and always improved them with his detailed criticisms. I owe my understanding of implicit contracts theory to two of my colleagues at Cornell, Kenneth Burdett and Randall Wright. Ken taught me contracts theory at the University of Wisconsin, and has continued to give me the benefit of his insights since we both moved to Cornell. Randy offered me invaluable help in revising the model into the form that appears in Chapter 3. Joel Mokyr (who once called my model of poor relief a "neoclassical soap opera") and Mary MacKinnon read drafts of most of the chapters of the book, and greatly improved them with their criticisms and suggestions. Stanley Engerman and Michael Edelstein read the entire manuscript, and their detailed comments significantly improved the final version of the book.
This chapter describes the interwar expansion of social welfare policies and their role in allevi... more This chapter describes the interwar expansion of social welfare policies and their role in alleviating economic insecurity in an era of unprecedented unemployment. The social security system established before the war and extended in the 1920s consisted of several independently administered programs—unemployment insurance, sickness and disability insurance, old age pensions, widows' and orphans' insurance, and the Poor Law. This safety net of many colors proved to be quite successful in alleviating poverty and maintaining the well-being of working-class households. The important role played by the safety net is clearly shown in the social surveys undertaken in the 1930s—between one-third and one-half of all working-class families surveyed received social income of some form. While the condition of the working class would have been considerably worse without the safety net, it contained many holes, which led to calls for a restructuring of social policy.
This chapter demonstrates how the aged coped economically and the extent of their reliance on the... more This chapter demonstrates how the aged coped economically and the extent of their reliance on the Poor Law from the 1860s to 1908. The share of working-class persons 65 and older receiving poor relief within a year ranged from about one-half in the 1860s to about one-third in 1908. A large part of this decline in old age pauperism resulted from policy changes brought about by the Crusade Against Outrelief. Workers found it difficult to save enough to provide for their old age. Those who were physically able continued to work, albeit at reduced pay, and many received assistance from their children. However, the ability of older workers to support themselves declined with age, and married children with families often were unable to assist aged parents. The combination of little saving, declining earnings, and lack of family support forced many of the aged to turn to the Poor Law.
This concluding chapter summarizes the book's major findings. The road to the welfare state o... more This concluding chapter summarizes the book's major findings. The road to the welfare state of the 1940s was not a wide and straight thoroughfare through Victorian and Edwardian Britain. As the previous chapters have made clear, the story of British social policy from 1830 to 1950 is really two separate stories joined together in the years immediately before the Great War. The first is a tale of increasing stinginess toward the poor by the central and local governments, while the second is the story of the construction of a national safety net, culminating in the Beveridge Report and Labour's social policies of 1946–48. The prototype for the welfare reforms of the twentieth century cannot be found in the Victorian Poor Law. The chapter then offers some thoughts regarding the reasons for the shifts in social welfare policy from the 1830s to the 1940s.
This chapter traces the roles played by the Poor Law, charity, and self-help from 1834 to 1870. W... more This chapter traces the roles played by the Poor Law, charity, and self-help from 1834 to 1870. Workers responded to the reduced availability of outdoor relief after 1834 by increasing their saving and joining friendly societies, but few were able to save more than a small amount, which was exhausted by spells of unemployment or sickness lasting more than a few weeks. As a result, many households continued to apply for poor relief during downturns, and urban Poor Law unions continued to provide outdoor relief to the unemployed despite pressure not to from the central administration. Unions proved unable to cope financially with the sharp increases in demand for relief during crises, and by the 1860s many were convinced that the system required a radical restructuring.
This chapter explores the story of the 1942 Beveridge Report and the beginnings of the welfare st... more This chapter explores the story of the 1942 Beveridge Report and the beginnings of the welfare state. The policies proposed by Beveridge and the 1945–48 legislation were logical extensions of government's expanding role in social welfare policy beginning with the Liberal Welfare Reforms. This does not mean that the importance of the postwar legislation should be downplayed. Because of the adoption of the National Health Service, universal coverage, and equality of treatment, Britain after 1948 deserves to be called a welfare state, while Edwardian and interwar Britain do not. Unfortunately, despite the enthusiasm with which the public greeted the welfare state, the postwar policies did not eliminate economic insecurity.
The Evolution of Unemployment Relief in Great Britain Unemployment was a major cause of economic ... more The Evolution of Unemployment Relief in Great Britain Unemployment was a major cause of economic insecurity for British workers throughout the nineteenth century. Business-cycle downturns occurred every five to eight years, and more than one-quarter of the years from 1834 to 1911 were plagued by high levels of cyclical unemployment. Even during prosperous years, many workers in seasonal or casual occupations experienced prolonged periods of unemployment. The average worker's savings were modest. A spell of unemployment longer than a few weeks led most manual workers to experience "acute financial" distress, forcing them to turn to other sourcestypically local government or charities-for income assistance. 1 Relatively little has been written about unemployment relief during the period between the passage of the Poor Law Amendment Act in 1834 an d the adoption of national unemployment insurance in 1911. This study is an attempt to help fill the gap in the literature. It examines the changing roles played by poor relief, private charity, trade unions, and public employment in the lives of the urban unemployed during cyclical downturns from 1834 to 1911. The story that emerges offers no support for a "Whig theory of welfare." Public assistance for the unemployed was more generous, and more certain, from 1834 to 1870 than it was from 1870
This introductory chapter provides an overview of economic insecurity. Economic insecurity can be... more This introductory chapter provides an overview of economic insecurity. Economic insecurity can be defined as “the risk of economic loss faced by workers and households as they encounter the unpredictable events of life.” Insecurity is associated with income loss caused by “adverse events” such as unemployment and poor health; the negative impact of these shocks on households depends “on the surrounding institutions that regulate risk.” Indeed, the extent to which workers suffered financial distress from income shocks depended in large part on the social safety net—the existing institutions of public and private assistance. For nineteenth-century England and Wales, the main social welfare institution was the Poor Law, a system of public relief administered and financed at the local level. The Old Poor Law of 1795–1834 was “a welfare state in miniature,” relieving the elderly, widows, children, the sick, the disabled, and the unemployed and underemployed.
pauperism rates, and regional differences in workers' reliance on the poor law. The paper the... more pauperism rates, and regional differences in workers' reliance on the poor law. The paper then examines the implications of these results for the debate over national old age pensions in the decades before the adoption of the Old Age Pension Act. T he standard of living of English workers increased sharply during the second half of the nineteenth century. Real weekly earnings for the average manual worker doubled from 1854-6 to 1904-6, and even agricultural labourers, the lowest paid adult male workers, experienced an increase in real earnings of 73 per cent during this period.2 Concurrent with the rise in incomes was a fall in pauperism rates. The share of the population of England and Wales receiving poor relief, as measured in the official government statistics, fell from 5.1 per cent in 1850-6 to 2.5 per cent in 1900-6.3 To many contemporary observers, the increase in wages, combined with the halving of pauperism rates, indicated that poverty was no longer a major issue in late Victorian England. However, two government studies conducted in the early 1890s found that, while pauperism rates were indeed low for children and prime age adults, the share of persons aged 65 and over receiving poor relief was quite high- 19.5 per cent using the 'official' one-day count, and 29.3 per cent using a 12-month count.4 These data, along with the 1895 Report of the Royal Commis sion on the Aged Poor and two detailed studies of poverty among the elderly by Charles Booth, gave impetus to the movement for government provision of pen sions for the elderly which was to culminate in the adoption of the Old Age Pension
Historians have long acknowledged that London, because of its enormous size and rapidly growing d... more Historians have long acknowledged that London, because of its enormous size and rapidly growing demand for labor, acted as a powerful magnet for migrants from throughout southern England. However, while there is a large literature documenting the flow of migrants to London, there have been surprisingly few attempts to determine the consequences of this migration for southern labor markets. This article attempts to redress the imbalance in the literature by examining the influence of London on agricultural labor markets during the nineteenth century. In particular, the article examines the effect of distance from London on wage rates in southern England at various points in time, and the effect of labor market conditions in London on short-run changes in agricultural wage rates. I find that there was a significant London wage effect throughout the nineteenth century and that annual changes in agricultural wage rates were largely driven by London wage and employment rates. The results of the article show that London and the rural South and East of England formed a wellfunctioning regional labor market throughout the nineteenth century. The analysis of agricultural wage data in the article complements the previous analyses of migration trends by historians. While most historians who have examined the relationship between rural and urban labor markets have relied almost exclusively on migration data, the results presented here show that this relationship can also be analyzed using wage data 1. In fact, the use of wage data is in many ways more attractive than the use of migration data. Migration data for England are not available before 1851, and even then they are available only at the county level of aggregation. Moreover, because only decadal migration rates can be constructed using census data, it is not possible to examine short-run responses by rural labor markets to economic conditions in London. In contrast, cross sections of agricultural wage data exist for various years throughout the nineteenth century, and large cross sections of wage data at the parish/district level of aggregation are available for 1832, 1894-98, and 1903. Moreover, annual wage series for agricultural laborers and London building laborers can be constructed for the second half of the century and used to determine the effects of labor market conditions in London on annual changes in agricultural wages. Thus, one can get a much better idea of the influence of London on rural labor markets using wage rates than migration rates. Historians have also shown that distance had a significant deterrent effect on migration in Victorian Britain-the greater the distance between origin and destination, the smaller the migration flow, other things being equal. Unfortunately, it is difficult to determine whether the deterrent effect of distance declined over time using migration data. This is an important issue, since many historians have argued that improvements in transportation and communications in the mid-nineteenth century must have sharply reduced the costs of migration and therefore reduced the deterrent effect of distance. I show in my article that this hypothesis can be tested by examining the trend in the effect of distance from London on wage rates. The magnitude of the wage gradient around London is a measure of the deterrent effect of distance on migration. By estimating the London wage effect at several points in time during the century, it is possible to get some idea of the effect of transportation improvements on the deterrent effect of distance.
This essay on labor economics examines neoclassical theory's rise to ascendancy following the sec... more This essay on labor economics examines neoclassical theory's rise to ascendancy following the second World War, with a secondary focus on the relative decline but continued influence of institutionalist economic theory. The authors describe the evolution of institutional and neoclassical theory from the late nineteenth to mid-twentieth centuries, examine some early intellectual debates between the two camps, briefly describe the work of neoclassical labor economics pioneers, and look at major developments over the past 30 years. They argue that neoclassical economists' increasing intellectual breadth and influence in public policy have led them to pay closer attention to issues that have long been of concern to institutionalists and "neoinstitutionalists." T he field of labor economics has changed dramatically in the postwar period. At the end of the second World War, labor economics was dominated by a group of academics who, while knowledgeable of neoclassical theory, had their roots in the institutionalist approach to economics. However, the next thirty years saw the rise to dominance of an approach to labor economics that was rooted in neoclassical economic theory. The same period saw a decline, within economics departments, of institutionalist-based labor economics. The
This book began in 1981 as a Ph.D. dissertation at the University of Wisconsin and has continued ... more This book began in 1981 as a Ph.D. dissertation at the University of Wisconsin and has continued to evolve and expand ever since. I have accumulated many debts in the process of writing the book, and I am happy to be able to thank those people who have generously taken the time to improve it. My greatest debt is to Jeffrey Williamson, who supervised my dissertation, and who has helped in every stage of the development of this work. Over the past decade Jeff has been my teacher, my critic, and my friend. He has consistently helped me to clarify my thinking and insisted that I find data to support my hypotheses. Without his enthusiasm and encouragement this book would never have been written. I also owe a major debt to Peter Lindert. Peter played an important role in the early stages of the project, helping me to formulate my ideas and directing me to the data necessary to test them. Since then he has read several versions of almost every chapter of the book and always improved them with his detailed criticisms. I owe my understanding of implicit contracts theory to two of my colleagues at Cornell, Kenneth Burdett and Randall Wright. Ken taught me contracts theory at the University of Wisconsin, and has continued to give me the benefit of his insights since we both moved to Cornell. Randy offered me invaluable help in revising the model into the form that appears in Chapter 3. Joel Mokyr (who once called my model of poor relief a "neoclassical soap opera") and Mary MacKinnon read drafts of most of the chapters of the book, and greatly improved them with their criticisms and suggestions. Stanley Engerman and Michael Edelstein read the entire manuscript, and their detailed comments significantly improved the final version of the book.
This chapter describes the interwar expansion of social welfare policies and their role in allevi... more This chapter describes the interwar expansion of social welfare policies and their role in alleviating economic insecurity in an era of unprecedented unemployment. The social security system established before the war and extended in the 1920s consisted of several independently administered programs—unemployment insurance, sickness and disability insurance, old age pensions, widows' and orphans' insurance, and the Poor Law. This safety net of many colors proved to be quite successful in alleviating poverty and maintaining the well-being of working-class households. The important role played by the safety net is clearly shown in the social surveys undertaken in the 1930s—between one-third and one-half of all working-class families surveyed received social income of some form. While the condition of the working class would have been considerably worse without the safety net, it contained many holes, which led to calls for a restructuring of social policy.
This chapter demonstrates how the aged coped economically and the extent of their reliance on the... more This chapter demonstrates how the aged coped economically and the extent of their reliance on the Poor Law from the 1860s to 1908. The share of working-class persons 65 and older receiving poor relief within a year ranged from about one-half in the 1860s to about one-third in 1908. A large part of this decline in old age pauperism resulted from policy changes brought about by the Crusade Against Outrelief. Workers found it difficult to save enough to provide for their old age. Those who were physically able continued to work, albeit at reduced pay, and many received assistance from their children. However, the ability of older workers to support themselves declined with age, and married children with families often were unable to assist aged parents. The combination of little saving, declining earnings, and lack of family support forced many of the aged to turn to the Poor Law.
This concluding chapter summarizes the book's major findings. The road to the welfare state o... more This concluding chapter summarizes the book's major findings. The road to the welfare state of the 1940s was not a wide and straight thoroughfare through Victorian and Edwardian Britain. As the previous chapters have made clear, the story of British social policy from 1830 to 1950 is really two separate stories joined together in the years immediately before the Great War. The first is a tale of increasing stinginess toward the poor by the central and local governments, while the second is the story of the construction of a national safety net, culminating in the Beveridge Report and Labour's social policies of 1946–48. The prototype for the welfare reforms of the twentieth century cannot be found in the Victorian Poor Law. The chapter then offers some thoughts regarding the reasons for the shifts in social welfare policy from the 1830s to the 1940s.
This chapter traces the roles played by the Poor Law, charity, and self-help from 1834 to 1870. W... more This chapter traces the roles played by the Poor Law, charity, and self-help from 1834 to 1870. Workers responded to the reduced availability of outdoor relief after 1834 by increasing their saving and joining friendly societies, but few were able to save more than a small amount, which was exhausted by spells of unemployment or sickness lasting more than a few weeks. As a result, many households continued to apply for poor relief during downturns, and urban Poor Law unions continued to provide outdoor relief to the unemployed despite pressure not to from the central administration. Unions proved unable to cope financially with the sharp increases in demand for relief during crises, and by the 1860s many were convinced that the system required a radical restructuring.
This chapter explores the story of the 1942 Beveridge Report and the beginnings of the welfare st... more This chapter explores the story of the 1942 Beveridge Report and the beginnings of the welfare state. The policies proposed by Beveridge and the 1945–48 legislation were logical extensions of government's expanding role in social welfare policy beginning with the Liberal Welfare Reforms. This does not mean that the importance of the postwar legislation should be downplayed. Because of the adoption of the National Health Service, universal coverage, and equality of treatment, Britain after 1948 deserves to be called a welfare state, while Edwardian and interwar Britain do not. Unfortunately, despite the enthusiasm with which the public greeted the welfare state, the postwar policies did not eliminate economic insecurity.
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