Economic Consequences of the U.S. Convict Labor System

Mikhail Poyker

No 91, Working Papers Series from Institute for New Economic Thinking

Abstract: Prisoners employed in manufacturing constitute 4.2% of total U.S. manufacturing employment in 2005; they produce cheap goods, creating labor demand shock. I study the economic externalities of convict labor on local labor markets and firms. Using newly collected panel data on U.S. prisons and convict-labor camps from 1886 to 1940, I calculate each county`s exposure to prisons. I exploit quasi-random variation in county`s exposure to capacities of pre-convict-labor prisons as an instrument. I find that competition from cheap prison-made goods led to higher unemployment, lower labor-force participation, and reduced wages (particularly for women) in counties that housed competing manufacturing industries. The introduction of convict labor accounts for 0.5 percentage-point slower annual growth in manufacturing wages during 1880– 1900. At the same time, affected industries had to innovate away from the competition and thus had higher patenting rates. I also document that technological changes in affected industries were capital-biased.

Keywords: Convict Labor; Labor Competition; Patenting; Technology Adoption (search for similar items in EconPapers)
JEL-codes: J23 J31 J47 N31 N32 N71 N72 O33 R12 (search for similar items in EconPapers)
Pages: 90 pages
Date: 2019-02
New Economics Papers: this item is included in nep-his and nep-ure
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Economic Consequences of the U.S. Convict Labor System (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:91

DOI: 10.2139/ssrn.3347300

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