Industrialization and wage inequality in nineteenth-century urban America

Abstract

What happened to wage inequality during American industrialization? This paper uses old and new data to address this question. The old data are in the form of pay ratios, while the new capture changes in the overall wage distribution, rather than in just the relative pay of workers at the top and bottom. Using payroll information from the Aldrich report for establishments in construction, railroads, and manufacturing, we calculate Theil indices for all production workers. These two data sets provide complementary information but suggest a common conclusion — namely that American wage inequality did not rise perceptibly over the nineteenth century.