Institutional choice matters: The poor law and implicit labor contracts in Victorian Lancashire

This paper augments previous research on the use of public relief as insurance during industrial downturns by looking at the timing of movement to public relief over the course of the Lancashire cotton famine (1861-1865). Able-bodied workers and their non-able-bodied counterparts, some of whom were the relatives of able-bodied workers, used public relief only as an assistance institution of final recourse, requesting it with a lag relative to the onset of the distress. The comovement of able-bodied and non-able-bodied recipients to public relief suggests a prevalent culture of income smoothing between the two groups and demonstrates the importance of informal assistance in the implicit labor contract in textile manufacturing.