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Shame and Guilt in Lancashire: Enforcing Piece Rate Contracts

The ratchet effect undermines firms' ability to pay workers a steady piece rate. Using examples from the nineteenth-century British textile industry, this paper studies the different strategies firms and workers used to enforce piece rates. The strategies depended upon the emotional responses of workers, especially their relationship with their co-workers and with their employers. Following Lazear (1995), I argue that external or shame-based sanctions were prevalent in communities where workers showed indifference between the welfare of their co-workers and that of their bosses. In these cases, blacklists enforced the piece rate. Where workers felt more guilt about the welfare of their coworkers, internal sanctions were common. In guilt cultures, profit-sharing schemes enforced the established piece rate.
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