Working Paper: NBER ID: w9868
Authors: Chiaki Moriguchi
Abstract: 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.
Keywords: No keywords provided
JEL Codes: N32; N82; J32; J50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Severity of depression (I12) | Repudiation of implicit contracts (D86) |
| Internal enforcement mechanisms (P37) | Repudiation of implicit contracts (D86) |
| Repudiation of implicit contracts (D86) | Changes in labor management relations under the New Deal regime (J58) |