War, Inflation, and Wages: The Labor Market in Finland, 1910-1925

The First World War was an immense economic shock also for the Finnish economy. As the war began, Finland, as the Grand Duchy of Russia, was cut off from its main export market in Western Europe. During the first war years, however, Russian war-related demand boosted Finnish exports and industry (me...

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Main Author: Sakari Heikkinen
Format: Article
Language:English
Published: Economic & Business History Society 2017-03-01
Series:Essays in Economic and Business History
Online Access:https://www.ebhsoc.org/journal/index.php/ebhs/article/view/60
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spelling doaj-2fe8d24d17ec4c709c75d12d5c525ad42020-11-25T03:05:28ZengEconomic & Business History SocietyEssays in Economic and Business History0896-226X2017-03-01351636960War, Inflation, and Wages: The Labor Market in Finland, 1910-1925Sakari Heikkinen0University of HelsinkiThe First World War was an immense economic shock also for the Finnish economy. As the war began, Finland, as the Grand Duchy of Russia, was cut off from its main export market in Western Europe. During the first war years, however, Russian war-related demand boosted Finnish exports and industry (metal and textiles). This boom ended in bust after the Russian revolution. Furthermore, the Finnish Civil War in 1918 aggravated the crisis. The peg of the Finnish currency markka to the ruble (until 1917) and a deficit in state finances fueled inflation: the price level increased about elevenfold before the markka was stabilized in the early 1920s. Because the labor movement lost the civil war, its political position was rather weak after 1918. This paper analyzes these turbulent years from the viewpoint of the labor market in examining the development of nominal and real wages of manufacturing workers, focusing on the four main industries: sawmill, paper and pulp, metal and textile industries. We show that the asymmetrical shocks they faced caused great variation in their wage and employment development. A comparison with Sweden, France, the United Kingdom, and the United States shows that the relative position of manufacturing workers (real earnings/real GDP per capita) developed more favorably in the deflation economies (Sweden, the UK, and the USA) than in the inflation economies (Finland and France).https://www.ebhsoc.org/journal/index.php/ebhs/article/view/60
collection DOAJ
language English
format Article
sources DOAJ
author Sakari Heikkinen
spellingShingle Sakari Heikkinen
War, Inflation, and Wages: The Labor Market in Finland, 1910-1925
Essays in Economic and Business History
author_facet Sakari Heikkinen
author_sort Sakari Heikkinen
title War, Inflation, and Wages: The Labor Market in Finland, 1910-1925
title_short War, Inflation, and Wages: The Labor Market in Finland, 1910-1925
title_full War, Inflation, and Wages: The Labor Market in Finland, 1910-1925
title_fullStr War, Inflation, and Wages: The Labor Market in Finland, 1910-1925
title_full_unstemmed War, Inflation, and Wages: The Labor Market in Finland, 1910-1925
title_sort war, inflation, and wages: the labor market in finland, 1910-1925
publisher Economic & Business History Society
series Essays in Economic and Business History
issn 0896-226X
publishDate 2017-03-01
description The First World War was an immense economic shock also for the Finnish economy. As the war began, Finland, as the Grand Duchy of Russia, was cut off from its main export market in Western Europe. During the first war years, however, Russian war-related demand boosted Finnish exports and industry (metal and textiles). This boom ended in bust after the Russian revolution. Furthermore, the Finnish Civil War in 1918 aggravated the crisis. The peg of the Finnish currency markka to the ruble (until 1917) and a deficit in state finances fueled inflation: the price level increased about elevenfold before the markka was stabilized in the early 1920s. Because the labor movement lost the civil war, its political position was rather weak after 1918. This paper analyzes these turbulent years from the viewpoint of the labor market in examining the development of nominal and real wages of manufacturing workers, focusing on the four main industries: sawmill, paper and pulp, metal and textile industries. We show that the asymmetrical shocks they faced caused great variation in their wage and employment development. A comparison with Sweden, France, the United Kingdom, and the United States shows that the relative position of manufacturing workers (real earnings/real GDP per capita) developed more favorably in the deflation economies (Sweden, the UK, and the USA) than in the inflation economies (Finland and France).
url https://www.ebhsoc.org/journal/index.php/ebhs/article/view/60
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