Between the Civil War and World War I, the effects of emancipation in the South, ongoing transportation improvements, the continuing process of western settlement, increasing urbanization, and industrialization combined to produce a spatially unbalanced pattern of economic growth in the United States. The previous chapters have examined how labor market institutions developed in response to the resulting imbalances between the supply of and the demand for labor. This chapter examines wage and earnings data to provide an assessment of how well these institutions worked in promoting geographic mobility and creating a broad, geographically integrated labor market.

Based on a broad range of evidence, it appears that the market institutions that emerged in response to American industrialization produced a remarkable but uneven expansion of labor market boundaries. By the 1880s, cities throughout the Northeast and Midwest were part of a single, effectively unified market. This market was, in turn, closely linked to labor markets in northern Europe. A parallel process of integration is also apparent between the eastern and western regions of the American South. Yet, interregional and international market integration coincided with the persistent isolation of northern and southern labor markets from one another.

The message of this chapter is twofold. First, markets worked well. As economic theory suggests, competitive forces created strong pressures toward wage equalization. Presented with opportunities for spatial arbitrage between regions with relatively abundant labor and regions with relatively scarce labor, market participants developed effective institutions to mobilize labor.