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Exploring regional wage dispersion in Swedish manufacturing, 1860–2009

Journal article
Authors Kristoffer Collin
Christer Lundh
Svante Prado
Published in Scandinavian Economic History Review
Volume 67
Issue 3
Pages 249-268
ISSN 0358-5522
Publication year 2019
Published at Department of Economy and Society, Economic History
Pages 249-268
Language en
Links https://doi.org/10.1080/03585522.20...
Keywords labour market institutions, labour market integration, labour mobility, regional cost of living, Regional wage convergence
Subject categories Economic History

Abstract

Economic theory predicts that regional wages will converge as transport and communication technologies bring labour markets together. An exploration of this transition from labour market segmentation to unification requires long-term evidence of nominal wages and cost of living by region. This paper presents new evidence of wages for male manufacturing workers and cost-of-living indices across 24 Swedish counties between 1860 and 2009. Our findings indicate that the Swedish regional wage differentials were a great deal larger in the 1860s than in the 2000s. Most of the compression took place between the 1860s and World War I, as well as in the 1930s and during World War II. Differences in expenditures on housing impact on our assessment of convergence in the post-World War II decades: the nominal measure declines, while the real one stays constant. Our concluding discussion engages with the assumption that before World War I, regional wage convergence was associated with labour mobility, spurred by improved communication and transportation technologies as well as by the implementation of modern employment contracts. In the 1930s and 1940s, in contrast, regional wage convergence can be traced to high unionisation and centralised collective bargaining in the labour market, two distinguishing features of the Swedish Model.

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