Agricultural Wage Rates Under Forced and Free Labour: Pre‐1944 and Post‐1954 Guatemala

Abstract

From 1871 to 1944 liberal trade and foreign investment policies were combined with illiberal labour coercion to create a classic export economy based on coffee plantations. The substantial reallocation of labour from the subsistence‐oriented peasant economy to the coffee sector is associated with a sustained reduction in the agricultural wage rate. Throughout the forced labour period the wage was below a subsistence level, made possible by rural workers’ access to land for their own subsistence production. The post‐1954 free labour period is associated with a once‐and‐for‐all doubling of the real wage to a subsistence level, consistent with the emergence in this period of a sizeable landless rural labour force. In the free labour era, the commercial agricultural sector has grown in ‘classical’ fashion, drawing on labour at a virtually constant, subsistence wage.