Applied Economics Lunch Seminar

Du 12/04/2022 de 12:30 à 13:30

Salle R1.09 PSE

RASTER Tom (PSE)

When Labor Scarcity Raises Coercion: Evidence from the Great Northern War Plague

Labor scarcity is hypothesized as one of the main drivers of coercion. However, its effects on coercion are ambiguous and depend on two competing channels. Scarce labor demands a higher wage, which incentivizes employers to coerce laborers instead of matching their wage demands. Yet, labor may also be scarce in other sectors, presenting laborers with an outside option, which limits employers' ability to coerce them. This paper provides the first estimate of the causal effect of labor scarcity on coercion intensity. Compiling detailed data on Estonian serfs, I show that the Great Northern War plague (1710-12) created variation in labor scarcity that is locally quasi-exogenous, as it cannot be predicted by a host of pre-plague characteristics. I find that localities that saw more plague deaths experienced higher levels of coercion in subsequent years, suggesting that outside options in other sectors were limited. As a final step, I instrument labor coercion with plague deaths in order to obtain causal estimates of the effects of coercion on outcomes before and after the abolition of serfdom in 1816-19. My results show that coercion leads to lower education and trust.