Is There Profit in Reforming the Poor? The English Experience, 1812-1855

University Of California-Davis, Davis CA

Investigators

Abstract

This project estimates the social costs of the welfare system that operated in England prior to the Poor Law Reform of 1834. The old system gave all persons a legal entitlement to a subsistence income if they could not support themselves. Since the subsistence allowance for married workers with children was often greater than the available wage, it was feared the old system created great economic losses by reducing the work incentives and limiting labor mobility. The reform retained the right to subsistence, but subsistence was to be delivered in a much less attractive form to the able bodied - in a workhouse under close supervision. The reforms led to reduced welfare payments per head of the population after 1834. We measure whether these cuts produced the efficiency gains predicted by looking at what happened to the rental value of property in parishes where their were more poor relief recipients before the reform. We also test whether the reforms speeded migration from low wage rural parishes to high wage urban parishes. As part of the project we combine data on poor payments and land rents with a database on parish characteristics constructed by Clark under an earlier NSF grant to create a rich source of characteristics of parishes in England in the years 1800-51 that will be useful to future economic and social historians. We find that the Old Poor Law, despite its apparent deficiencies, served mainly as a transfer of income from land owners to the poor with little extra costs in the form of reduced labor inputs, labor effort, or labor mobility. These results that it was possible for many years to run a welfare system that guaranteed subsistence, and that more than 10% of the population in rural areas participated in, without creating great social costs. In future research we will explore what overlooked features of the old system kept social costs down.