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The Elgar Companion to the Chicago School of Economics

The Elgar Companion to the Chicago School of Economics

Elgar original reference

Edited by Ross B. Emmett

Many know the Chicago School of Economics and its association with Milton Friedman, George Stigler, Ronald Coase and Gary Becker. But few know the School’s history and the full scope of its scholarship. In this Companion, leading scholars examine its history and key figures, as well as provide surveys of the School’s contributions to central aspects of economics, including: price theory, monetary theory, labor and economic history. The volume examines the School’s traditions of applied welfare theory and law and economics while providing a glimpse into emerging research on Chicago’s role in the development of neoliberalism.

Chapter 9: Chicago and the Development of Twentieth-Century Labor Economics

Bruce E. Kaufman

Subjects: economics and finance, economic psychology, history of economic thought, methodology of economics


Bruce E. Kaufman* Introduction The two universities in America that exercised the largest influence on the economic study of labor during the twentieth century are Chicago and Wisconsin. They are also the home of the two major rival paradigms that have vied back and forth over the years for dominance: the institutional/industrial relations approach (Wisconsin) and the neoclassical/price theory approach (Chicago). During the first half of the century the Wisconsin paradigm was ascendant and, even at Chicago, labor economics was heavily colored by this tradition; in the last half of the century, however, the pendulum swung decisively toward Chicago, and the neoclassical/price theory approach came to rule the field. In other places I have described the major principles and historical evolution of the Wisconsin School in labor (Kaufman 2004a, 2006); in this chapter I do the same for the Chicago School. By the end, one readily appreciates why Chicago has been the most influential force shaping modern labor economics and why economists at Chicago have won more Nobel prizes than any other university in the world. Labor at Chicago: the early years The study of labor as a separate field in American economics did not begin until the first decade of the twentieth century, although recognizable work in the field goes back at least to Richard Ely’s The Labor Movement in America (1886, see Kaufman 2004a). The beginning point of the field is marked by the publication of the first collegiate labor text, Labor Problems by Thomas Adams and Helen...

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