Employer Recruitment and the Integration of Industrial Labor Markets 1870-1914

The substantial shifts in the sectoral and geographic location of economic activity that took place in the late nineteenth-century United States required the reallocation of large quantities of labor. This paper examines the response of labor market institutions to the challenges of unbalanced growth. Based on previously unexploited descriptive evidence from the reports of the Immigration Commission it argues that employer recruitment was crucial to the adjustment of labor markets to shifting patterns of supply and demand. Because individual employers could capture only a fraction of the benefits of recruitment, however, investment in this activity may have been less than would have been socially optimal, suggesting a possible explanation for the persistence of large geographic wage differentials.