Monopsony and Industrial Development in Nineteenth Century Quebec: The Impact of Seigneurial Tenure

Along with Vadim Kufenko and Alex Arsenault Morin, I have a new paper available (here on SSRN) on labor coercion. Labor coercion (i.e. labor market institutions that are geared towards redistributing rent from workers to employers) is a topic that has garnered growing interest on the part of economists such as Daron Acemoglu (see here).  Numerous case studies exist concerning sugar plantations in the Caribbean (here and here), the regulation of emigration agents in the United States that reduced the internal migration of Black Americans (see here) and British servants in the 19th century (see here). What this literature has cemented is the possibility that even “mild” coercion (i.e. the “lighter shades of coercion”) can have large negative effects.   In this most recent paper, myself and my co-authors use a mild coercive institution – that of seigneurial tenure of Canada – to expand on this insight. Using a provision in the Constitutional Act of 1791, we test the impact of this feudal institution on wages and industrial development in the province of Quebec between 1831 and 1851. We find that it had a large negative effect which depressed wages by a margin sufficient to bring Quebec in line with large portions of North America (rather than being a laggard). The abstract is below and the paper can be consulted here on SSRN:

We argue that the system of seigneurial tenure used in the province of Quebec until the mid-nineteenth century — a system which allowed significant market power in the establishment of plants, factories and mills, combined with restrictions on the mobility of the labor force within each seigneurial estate — is best understood as a system of regionalized monopsonies in the non-farm sector. Seigneurs had incentives to reduce their employment in those sectors to reduce wage rates. We use the fact that later, with the Constitutional Act of 1791, all new settled lands had to be settled under a different system (British land laws). This fact lends itself efficiently to a regression discontinuity design. Using wages contained in the 1831 census, we find strong evidence that the monopsonist features of seigneurial tenure depressed wages and industrial development.

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