
The Poor
Law,
Migration,
and Economic Growth 183
In other words, the system of outdoor relief enabled farmers to reduce
their wage payments by an amount eB, equal to their contribution to the
poor rate. Farmers' total expenditure on labor was not affected by the
Poor Law, and the difference between laborers' income and their mar-
ginal product was determined solely by the contribution of non-labor-
hiring taxpayers to the poor rate. A laborer's annual income is thus
W + B = MP
e
+ (1 - e)B
where
(1
- e)B
is
the relief payment per worker made
by
non-labor-hiring
taxpayers. The percentage increase in workers' income above the mar-
ginal product of labor brought about by the Poor Law is given by
(1 - e)BIMP
e
= {\- e)B/(W + eB)
Notice that this is precisely the solution to the problem of rising urban
wage rates suggested by Polanyi; farmers used the Poor Law to raise their
laborers' annual incomes without increasing their own payments to labor.
The effect of such a policy on rural-urban migration depends on the
value of (1 - e), the share of poor relief expenditures paid by local
taxpayers other than labor-hiring farmers. I assume that non-labor-
hiring taxpayers and landlords paid
20-33%
of the poor rate in the
typical agricultural parish.
14
Tables 6.3 and 6.4 contain estimates of the
percentage increase in agricultural laborers' annual incomes caused by
the Poor Law, and the percentage of the rural-urban wage gap elimi-
nated by relief payments, for the same counties as before.
15
Table 6.3
assumes that taxpayers who did not hire labor paid 20% of the poor rate,
while Table 6.4 assumes that non-labor-hiring taxpayers paid
33%
of the
poor rate.
The conclusion to be reached from the results is clear. Farmers may
have attempted to use the Poor Law as a dam to "prevent the draining
off of rural labor," as Polanyi contended, but such a policy could not
14
These represent lower- and upper-bound estimates for the value of (1 - e), obtained
from Section 3 of Chapter 3.
15
The differences in the size of rural-urban wage gaps between Tables 6.2, 6.3, and 6.4
follow from my assumption that the proper measure of the rural wage to be used in
calculating wage gaps is the marginal product of labor in agriculture, because that is the
wage that would have existed in the absence of poor
relief.
Table 6.2 assumes that the
marginal product of labor was equal to the observed
wage.
Tables 6.3 and 6.4 assume that
the marginal product of labor equaled W + eB, the observed wage plus the farmer's
contribution to the worker's relief benefit. Thus, the marginal product of labor
is
larger in
Tables 6.3 and 6.4 than in Table 6.2, and therefore the estimated rural-urban wage gaps
are smaller
in
Tables 6.3 and 6.4 than
in
Table
6.2.
The
wage gaps
differ between Tables 6.3
and 6.4 because I assume that e = 0.80 in Table 6.3 and that e = 0.67 in Table 6.4.