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Welfare State and Labor Mobility: The Impact of Bismarck's Social Legislation on German Emigration before World War I

Published online by Cambridge University Press:  01 March 2008

Professor of Economics, Universidad Externado de Colombia, Facultad de Finanzas, Gobierno y Relaciones Internacionales, Carrera 1 No. 12-66, Bogotá, Colombia. E-mail:


The rapid decline of German emigration before World War I constitutes a puzzle that traditional explanations have difficulty in solving. The article shows that the social legislation implemented by Bismarck during the 1880s—the most developed at the time—played a key role in this process. Indeed, candidates for migration considered not only the gap between “direct wages” (labor earnings) in the United States and Germany, but also the differential in “indirect wages,” that is, social benefits. In that way, Bismarck's insurance system partly offset low wage rates in Germany and furthered the fall of the emigration rate.

      O sprecht! warum zogt ihr von dannen?
      Das Neckartal hat Wein und Korn;
      Der Schwarzwald steht voll finstrer Tannen,
      Im Spessart klingt des Ålplers Horn.
      Wie wird es in den fremden Wäldern
      Euch nach der Heimatberge Grün,
      Nach Deutschlands gelben Weizenfeldern,
      Nach seinen Rebenhügeln ziehn!
    Ferdinand Freiligrath1

Copyright © The Economic History Association 2008

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