Working Paper: NBER ID: w3198
Authors: Claudia Goldin; Robert A. Margo
Abstract: 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.
Keywords: Antebellum economy; real wages; labor markets; economic fluctuations
JEL Codes: N31; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shocks to real wages (J39) | economic conditions (E66) |
| shocks to real wages for laborers, artisans, and clerks (J39) | persistence of economic activity (E20) |
| persistence of shocks to real wages (J39) | economic activity during downturns (E32) |
| shocks to real wages (J39) | persistence of shocks (E32) |
| persistence of shocks to real wages for agricultural labor (J43) | persistence of shocks to real wages for other occupations (J39) |
| persistence of shocks to real wages for growing regions (F66) | persistence of shocks to real wages for mature regions (J39) |
| persistence of shocks to real wages for unskilled labor (F66) | persistence of shocks to real wages for skilled labor (F66) |