Dealing with economic stress through migration: Lessons from nineteenth century rural Sweden Martin Dribe
Abstract
Preindustrial society was characterised by vast uncertainties due to harvest failures and fluctuations in prices of basic commodities. These economic fluctuations had severe effects on the standard of living, especially for the poorer segments of the population, as shown for instance, by the increased mortality following economic crises. This article examines the extent to which migration could be used as a measure to deal with economic stress by sending individual family members away, or relocating the entire family. A micro-level approach is taken, where a longitudinal dataset at the individual level is used in the analysis of a rural community in southern Sweden for the period 1829–1866. The results show that landless people did not move in response to economic stress, most likely because of the lack of available alternatives and prohibitively high costs of long-range migration. Thus, migration does not appear to have been an effective way of dealing with economic stress in this preindustrial rural community.
Creating firms for a new century: Determinants of firm creation around 1900 Joerg Baten
A rapidly growing literature in industrial economics and regional economics uses data sets of individual firms or regional firm creation rates to answer the central question: what makes entrepreneurs? Which factors encourage some people to set up their own business and create jobs, and what prevents potential entrepreneurs from doing so? This contribution explores the determinants of regional differences in firm creation rates by using a new data set of 4,036 individual firms from Southwest Germany around 1900. Agglomeration effects and earlier firm creations stimulate current firm creation. In addition, a small and medium firm environment allows the formation of specific human capital – another favourable factor for a dynamic firm creation process in some regions.
Centralised wage bargaining and structural change in Sweden Michelle Alexopoulos, Jon Cohen
There is a general consensus among scholars that centralised wage bargaining played a key role in the ability of Sweden to maintain wage moderation in the early post-World War II period. Conventional wisdom suggests that it worked through one of two mechanisms: internalisation of the negative externalities associated with excessive wage settlements or implicit contracts that favoured cooperation between capital and labour over conflict. We contend, instead, that centralised wage bargaining was introduced because Swedish firms and unions adopted the Rehn-Meidner plan. In this environment, centralised wage bargaining was used to facilitate wage compression from below and promote labour release. Wage moderation then was a result of shifts in the labour supply. In the final section of the article we argue that excessive wage compression in the 1970s sapped the morale and effort of skilled workers, pushed down productivity and profits and eventually led to the demise of centralised wage determination.
English commercial banks and business client distress, 1946–63 Mae Baker, Michael Collins
The article examines the behaviour of two leading English clearing banks, the Midland and Westminster, during periods of financial distress suffered by a sample of business clients during the early postwar decades. Such periods provide valuable insight into the nature of bank–business relationships at that time for, in a sense, bank reaction during periods of financial difficulty for client firms helps define the limits to bank support and commitment to such firms. The article examines the banks' behaviour within the context of a transaction bank model (as opposed to what might be termed a relationship bank model) and the results are compared with those of an earlier study by the authors of pre-First World War bank practice. The results show that the banks did operate many of the control mechanisms associated with transaction banking and that the proficiency of such controls ensured that the banks' interests remained reasonably secure even for the high risk loans under study. Importantly, however, the evidence also shows that the banks did not exercise a stark choice between, on the one hand, supporting clients while relying upon traditional control mechanisms, and, on the other, withdrawing support. In a significant number of cases, the banks were prepared to invest in gathering more information on a client's business, and in trying to influence the direction of that business. This suggests a more informed and interventionist approach by the banks in these cases compared to the findings in the pre-1914 study. For the sample of cases examined, it seems that while much of the behaviour of the two banks remained consistent with the transaction bank model, compared to our pre-1914 findings there was also a greater tendency towards a more flexible, ‘hands-on’ approach in extremis. In these cases, English bank behaviour was similar in some respects to that of the more interventionist European banks, and less like that predicted by the transaction bank model.