Labour Supply in Early Industrialization: the Case of the Bombay Textile Industry

Abstract

The problems of labor supply to the Bombay textile industry are examined. In spite of evidence of excess labor supply, there was an undercurrent of complaint of labor shortage, high wages, and high labor cost per unit of output. The notion that labor was migrant and thus not committed to the industrial sector is not supported by the data, nor is the hypothesis that strong institutional influences caused the paradox of excess labor supply and high wages with consequent labor difficulties. The preference employers have for a stable and committed labor force suggests that demand price would be greater than that for nonstable labor. This does not explain the establishment of the wages for such labor at a level higher than the supply price of the general of nonstable labor. This outcome is conceivable if, along with its high demand price, the supply price of stable labor was also higher, a situation that might occur if the bulk of the stable labor was composed of migrants who settled in Bombay while the nonstable labor was composed of migrants who merely visited the city. The hypothesis of a gap in the supply prices of settled and visiting migrants appears substantiated by the data.