This paper has been a work in progress since 2016 and it has just been accepted and published online at the Journal of Development Economics. It is co-authored with two close friends (Vadim Kufenko of the University of Hohenheim and Alex Arsenault Morin of Queen’s University). It argues that weak coercive labor regime can be as detrimental to development as more coercive regimes. We apply this to the case of colonial Quebec using a unique institution known as seigneurial tenure which created localized monopsonists. The effect was heavily depressed wages in those areas with that unique institution.
The abstract is below and the paper can be accessed here (free and ungated until June 13 2023):
Can mild forms of labor coercion generate welfare effects as large as more extreme forms? Do these effects persist over time? To answer both questions, we use Quebec’s system of seigneurial tenure (in effect until 1854) that granted landlords market power in the establishment of factories, and restricted worker mobility. This created a mild form of labor coercion as landlords had incentives to reduce employment and wage rates. To measure these effects, we rely on the Constitutional Act of 1791 which stated that all new lands had to be settled under a different tenure system. Using a regression discontinuity design, we find that seigneurial tenure significantly depressed wages. The effect on wages is as large, or larger than, causal estimates of significantly more coercive labor regimes. We also find that by 1871, seventeen years after the institution’s abolition, these effects had fully dissipated, suggesting that persistence is not an issue.