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Abstract
How did workers make provisions for old age before the introduction of old age pensions? What was the relative importance of dependence on children and saving for old age respectively? This article concerns the transition from a traditional family-based system for economic support in old age to a more modern system. Regarding the nineteenth century, studies have shown that (a) savings generally were insufficient for full retirement, and that (b) families were dependent on children's incomes when the breadwinner became older. Little attention has been paid to the question of how the relative importance of these two alternatives changed during the century. This question is addressed here in a cross-sectional study of net wealth based on probate inventories for three Swedish towns in the 1820s and the 1900s.
The results show that in general the economic importance of children was larger among the lower socio-economic strata. They also reveal that net costs for having children increased between the investigated periods. This means that dependence on children became more expensive. Consequently, the economic importance of this alternative decreased. This may have been a strong motive for the fertility transition.
On the other hand, net wealth for workers increased at the end of the nineteenth century. Financial assets constituted a great part of the increase. Workers with children had less financial savings than those without children, showing that there was a conflict between the traditional and the modern systems for support in old age. However, still at the turn of the twentieth century funds were generally too small to allow an old worker to retire. These results indicate that neither the old, nor the modern systems, fully satisfied the need for support in old age. This may explain why several Western European countries introduced old age pensions at the beginning of the twentieth century.
Acknowledgements
The authors would like to thank the participants at the ESSHC session ‘Women, Family Income and Expenditures in the nineteenth and early twentieth Century’, held in Glasgow in April 2012, as well as Lynn Karlsson, and two anonymous referees, for valuable comments and suggestions on earlier drafts of this article. The authors also acknowledge financial support from the Jan Wallander and Tom Hedelius' Foundation, Sweden, for the project ‘Family saving in a life cycle perspective’.
Notes
1. The Swedish guild system was abolished in 1846. Magnusson, Citation2010, pp. 237–8.
2. In fact this means that individuals with probated wealth over 4500 SEK or net debts over 1750 SEK were excluded in the 1820s. For the 1900s corresponding limits were 10,000 SEK and 2000 SEK respectively. Wealth in constant prices 1900–04 (Jörberg, Citation1972, p. 350).
3. Riksdaler riksgälds was the official currency in the 1820s and the Swedish Krona (SEK) became the official currency from 1873. Edvinsson (Citation2010, p. 47).
4. During the first half of the nineteenth century children often started factory work at the age of 10. Olsson (Citation1980, pp. 80–5).
5. Edgren (1982, pp. 27–43) draws a similar conclusion regarding master artisans' ability to save for retirement.
6. The average daily wage for an unskilled worker in Stockholm in 1820–25 was 0.68 riksdaler riksgälds. www.Historia.se. The amount has been calculated by using 300 working days per year.
7. Out of a total of 54 workers, 21 (39%) had more wealth than the yearly earnings for an unskilled worker. The probate rate was 30%.
8. For workers older than 60 years, the correlation between having children and owning real estate was r = 0.41 (p = 0.009).
9. Haines (Citation1979). For mine workers in Sweden, Lilja (Citation2004), pp. 160–162 shows that this happened when they were in their 40s.
10. Average annual earnings were 947 SEK. Bagge et al. (Citation1933, p. 260).
11. To test if the difference between 1820–25 and 1900–05 was significant, the two groups, master artisans and workers, in 1820–25 (skilled workers and unskilled workers 1900–05) were added together because there were so few observations. This test resulted in chi2 = 4.24 and p = 0.039. In the comparison no consideration was taken to changes in the norm for poor relief, as data for this were lacking for the 1820s.
12. In 1901–1910 expectation of life at the age of 65 was 13 years, and in 1820 it was 10 years. Historical statistics… (Citation1969).
13. 29% had poor relief. 12% got private support as well as poor relief. Ålderdomsförsäkringskommittén. IV. Statistiska utredningar (Citation1912), pp. 603–25 and 770.
14. For a different interpretation, see Szreter (Citation1996).
15. For a 15 year old person, life expectancy was 49.8 years (male) and 51.5 years (female). Historical statistics for Sweden … (Citation1969).
16. In fact median age at death was approximately 65 for the probated in 1900–05 with adult children.
17. For skilled workers the correlation between the number of children and the amount of financial assets was r = − 0.28 (p = 0.004). For unskilled workers corresponding figures were r = − 0.17 (p = 0.012).
18. For those in the lowest income quartile the difference was 23%, and for those in the highest it was 7%. Sveriges officiella statistik (SOS) (Citation1921b).