A comparison of the Swedish and German wage share in manufacturing 1870 to 1913 - Exploring the role of power resources for the wage share

Abstract: Abstract: This thesis analyzes the distribution of profits to labor. The factor share distribution has attracted mounting attention from researchers in the last decades, as it has been identified as a central determining factor for economic inequality. However, how the factor share distribution has developed historically is debated. By analyzing the historical wage share for manufacturing workers in Sweden and Germany during the industrialization process from 1870 to 1913, this thesis provides a new angle, examining the wage share in manufacturing testing variables which in previously literature have been pointed out to impact the wage share. The analysis finds limited empirical evidence that union strength impacted the wage share for manufacturing workers during this period, probably due to the low levels of labor organization and exclusive institutions. Instead, the relatively low wage share seems to have spurred an increase in unionization. Emigration stands out as the principal explanatory variable correlating with an increase in the wage share through increasing labor scarcity. This supports the extensive literature which has emphasized the role mass emigration in the 19th century had in enhancing the standard of living for workers in both Sweden and Germany.