Labor Productivity in the Railways, 1890-1920

Why do nations fail? Wolcott and Clark [2009] offer a perspective on economic growth through a comparison of the cotton textile industries in India and Japan in the late nineteenth and early twentieth centuries. Textile mills in the two nations had comparable outputs as of 1890. In the ensuing fifty years, output per worker hour quintupled in Japan but did not increase much in India. These trends fit well with the bigger picture of rapid Japanese growth and the sluggish Indian performance from 1890-1938. Why did India fail? It wasn’t the technology. It wasn’t the management. It was the labor. Such is the argument put forth by Wolcott and Clark [2009]. Compared to their Japanese counterparts, Indian mills were simply overstaffed. Indian workers were idle for significant portions of the day. The central problem of the Indian textile industry from 1890-1938 was “the failure to improve labor productivity.” Wolcott and Clark [2009] hypothesize that this stems either from high leisure preferences of Indian workers or the failure of the market bargaining power to incentivize workers to increase labor inputs. Indian workers may have resisted a “rationalization” of the work force by holding out for higher wages. While Wolcott and Clark do not state an explicit preference for either theory, they seem to lean towards the former in their arguments and ∗[email protected]