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The economic effects of the 1920 eight-hour working day reform in Sweden

Bengtsson, Erik LU and Molinder, Jakob (2017) In Scandinavian Economic History Review
Abstract

In 1920, the working day in Swedish manufacturing and services was cut from 10 to 8 hours without wages being cut correspondingly. Since workers demanded and got the same daily wage working 8 hours as they had with 10, real hourly wages increased dramatically; they were about 50% higher in 1921–1922 than they had been in 1919. This is the largest wage push in Swedish history, and this paper studies the consequences for profits, investments, capital intensity and unemployment. In traded manufacturing employers responded by increasing capital intensity and did not compensate for rising wages by raising prices, which led to a combination of jobless growth and low profit rates in the 1920s. Firms in non-traded manufacturing and services... (More)

In 1920, the working day in Swedish manufacturing and services was cut from 10 to 8 hours without wages being cut correspondingly. Since workers demanded and got the same daily wage working 8 hours as they had with 10, real hourly wages increased dramatically; they were about 50% higher in 1921–1922 than they had been in 1919. This is the largest wage push in Swedish history, and this paper studies the consequences for profits, investments, capital intensity and unemployment. In traded manufacturing employers responded by increasing capital intensity and did not compensate for rising wages by raising prices, which led to a combination of jobless growth and low profit rates in the 1920s. Firms in non-traded manufacturing and services could raise prices and conserve profitability to a higher degree. In total, the effects of the reform were pro-labour. We discuss the implications for our understanding of interwar wages and employment, the literature on the decrease in inequality found in most industrial countries around 1920 and the rise of the ‘Swedish model’ in the 1920s and 1930s.

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Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
epub
subject
keywords
employment, income distribution, Sweden, Wages, working hours
in
Scandinavian Economic History Review
pages
20 pages
publisher
Routledge
external identifiers
  • scopus:85014521603
ISSN
0358-5522
DOI
10.1080/03585522.2017.1290673
language
English
LU publication?
yes
id
579092c8-9302-48ae-8a27-caccc5c763cf
date added to LUP
2017-03-15 07:56:15
date last changed
2017-03-15 07:56:15
@article{579092c8-9302-48ae-8a27-caccc5c763cf,
  abstract     = {<p>In 1920, the working day in Swedish manufacturing and services was cut from 10 to 8 hours without wages being cut correspondingly. Since workers demanded and got the same daily wage working 8 hours as they had with 10, real hourly wages increased dramatically; they were about 50% higher in 1921–1922 than they had been in 1919. This is the largest wage push in Swedish history, and this paper studies the consequences for profits, investments, capital intensity and unemployment. In traded manufacturing employers responded by increasing capital intensity and did not compensate for rising wages by raising prices, which led to a combination of jobless growth and low profit rates in the 1920s. Firms in non-traded manufacturing and services could raise prices and conserve profitability to a higher degree. In total, the effects of the reform were pro-labour. We discuss the implications for our understanding of interwar wages and employment, the literature on the decrease in inequality found in most industrial countries around 1920 and the rise of the ‘Swedish model’ in the 1920s and 1930s.</p>},
  author       = {Bengtsson, Erik and Molinder, Jakob},
  issn         = {0358-5522},
  keyword      = {employment,income distribution,Sweden,Wages,working hours},
  language     = {eng},
  month        = {02},
  pages        = {20},
  publisher    = {Routledge},
  series       = {Scandinavian Economic History Review},
  title        = {The economic effects of the 1920 eight-hour working day reform in Sweden},
  url          = {http://dx.doi.org/10.1080/03585522.2017.1290673},
  year         = {2017},
}