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Labor Markets

Handbook of Cliometrics

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Abstract

This chapter presents a brief historical overview of labor and labor markets, using the United States as a case study. Topics include the concepts of the labor force and the labor market; sources of information for historical study; basic features of change over time in the size and composition of the labor force, hours worked, occupations, and skills; changes in real wages over time and in the structure of wages; the emergence of a national market for labor; and the evolution of racial differences.

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Notes

  1. 1.

    The assumption that the factor shares sum to one is equivalent to assuming that the aggregate production function is constant returns to scale. However, a strong case can be made for increasing returns in the aggregate – so-called endogenous growth; see PM Romer (1986). The output elasticities will equal their respective factor shares if the factor markets are competitive, so that each factor is paid the value of its marginal product.

  2. 2.

    The distinction is important historically in the case of the United States because historically much production took place within households. Household production, however, declined as transportation costs fell and more economic activity took place within markets.

  3. 3.

    It is possible to adjust the figures to make the pre- and post-1940 figures comparable because information was collected at the time using both questions allowing adjustment factors to be computed; see Durand (1948).

  4. 4.

    It can also occur if information flows between A and B improve so that workers have more accurate knowledge of labor market conditions.

  5. 5.

    That said, labor markets exist in a continuum between truly free labor and slave labor. Historically much labor was restricted in ways that limited labor mobility and even today labor markets are not truly free in the economic sense. For example, many workers in the United States today sign so-called “noncompete” clauses which prohibit them from working for a competitor for some period of time if they terminate their employment with their current employer.

  6. 6.

    For example, because both asset and rental prices are known, it is possible to estimate the internal rate of return to owning a slave; see Fogel and Engerman (1974).

  7. 7.

    For additional analyses of historical data on the length of the work data, see Whaples (1990), Costa (2000), and Vandenbroucke (2009).

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Authors and Affiliations

  1. Boston University and National Bureau of Economic Research, 270 Bay State Road, 02215, Boston, MA, USA

    Robert A. Margo

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  1. Robert A. Margo
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  1. BETA/CNRS (UMR 7522), University of Strasbourg Institute for Advanced Study, Strasbourg Cedex, France

    Claude Diebolt

  2. University of Wisconsin Department of Economics, La Crosse, Wisconsin, USA

    Michael Haupert

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Margo, R.A. (2014). Labor Markets. In: Diebolt, C., Haupert, M. (eds) Handbook of Cliometrics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40458-0_27-1

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  • DOI: https://doi.org/10.1007/978-3-642-40458-0_27-1

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  1. Latest

    Labor Markets
    Published:
    18 July 2023

    DOI: https://doi.org/10.1007/978-3-642-40458-0_27-2

  2. Original

    Labor Markets
    Published:
    05 October 2014

    DOI: https://doi.org/10.1007/978-3-642-40458-0_27-1

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