Download 1. Economic Growth, 1000-1870

EH1: SB TOPIC 1
Economic Growth, 1000-1870
OVERVIEW
• This part of the course aims to provide an
overview of the Great Divergence of
productivity and living standards between
Europe and Asia
• Emphasis is placed on the need to establish
firmly the historical “facts” that are to be
explained as well as on providing a satisfactory
economic explanation
2
TOPICS
•
•
•
•
1. Economic Growth, 1000-1870
2. Wages, Prices and the Great Divergence
3. Cotton Textiles and the Great Divergence
4. Accounting for the Great Divergence
3
TOPIC 1: ECONOMIC GROWTH, 1000-1870
LECTURE OUTLINE
•
•
•
•
•
•
A. HISTORICAL NATIONAL ACCOUNTING
1. The Maddison Data Set
2. Basis of the Population Estimates
3. Basis of the Income Estimates
4. International Comparisons
5. International Comparisons before 1870: The
Great Divergence Debate
• 6. Improving on Maddison
4
A. HISTORICAL NATIONAL
ACCOUNTING
• Until surprisingly recently, there was no systematic
quantitative overview of the basic contours of long
run economic development
• Although there were a few isolated studies with data
on individual parts of a number of European
economies, there had been no attempt to pull them
together
• The pioneer here was Angus Maddison, who spent a
lifetime developing an approach known as “Historical
National Accounting”
5
Historical National Accounting
• I will end up suggesting that Maddison’s
estimates are seriously misleading and are in
the process of being replaced
• But that should not take away from the
magnitude of his achievement. He was
unambiguously the pioneer of a great project,
which remains to be completed
6
1. THE MADDISON DATA SET
• Quantification of world economic history received a
major boost with the publication of Maddison’s
(2001), World Economy: A Millennial Perspective
• Until the early 1990s, data on comparative levels of
per capita income were largely restricted to the
“Maddison 16” of rich industrialised countries and
covering only the period since 1870
7
The Maddison data set
• Following an explosion of interest in the production
of historical national accounts, by 1995 Maddison
was able to extend estimates back to 1820 for many
rich industrialised countries and back to 1870 for
many other countries
• Maddison’s 2001 volume is much more ambitious,
and aims to provide global coverage for the period
back to 1820 and rough estimates back to 1000 for
selected economies
• Final version from 2010 available on GGDC website
8
What Maddison’s data show
• TABLES 1 & 2: Between 1000 and 1998, population
rose 22-fold, per capita income rose 13-fold. In
previous millennium, population increased by onesixth and per capita income fell slightly.
• Two distinct epochs in 2nd Millennium:
– Between 1000 and 1820, p.c. income increased by 50%,
population rose by a factor of four. Growth was largely
extensive
– Since 1820, more intensive development (g of p.c. income
> g of pop). Pop increased by factor of < 6, p.c. income
increased by factor of > 8
9
TABLE 1: Level and rate of growth of population: World and
major regions, 0-1998 A.D.
0
1000
1820
1998
(million)
15.4
132.9
2.0
11.2
7.5
31.0
34.9
175.1
388
323
126
838
0-1000
100018201820
1998
(annual average growth)
0.00
0.20
0.60
0.05
0.21
1.91
0.09
0.17
0.79
0.02
0.20
0.88
Western Europe
Western Offshoots
Japan
Total Group A
24.7
1.2
3.0
28.9
Latin America
E. Europe & USSR
Asia (excl. Japan)
Africa
Total Group B
5.6
8.7
171.2
16.5
202.0
11.4
13.6
175.4
33.0
233.4
21.2
91.2
679.4
74.2
866.0
508
412
3,390
760
5,069
0.07
0.05
0.00
0.07
0.01
0.08
0.23
0.17
0.10
0.16
1.80
0.85
0.91
1.32
1.00
World
230.8
268.3
1,041
5,908
0.02
0.17
0.98
10
TABLE 2: Level and rate of growth of GDP per capita: World and
major regions, 0-1998 A.D.
0
1000
1820
1998
0-1000
100018201820
1998
(annual average growth)
-0.01
0.14
1.51
0.00
0.13
1.75
0.01
0.06
1.93
-0.01
0.13
1.67
Western Europe
Western Offshoots
Japan
Average Group A
(1990 international dollars)
450
400
1,232 17,921
400
400
1,201 26,146
400
425
669 20,413
443
405
1,130 21,470
Latin America
E. Europe & USSR
Asia (excl. Japan)
Africa
Average Group B
400
400
450
425
444
400
400
450
416
440
665
667
575
418
573
5,795
4,354
2,936
1,386
3,102
0.00
0.00
0.00
0.00
0.00
0.06
0.06
0.03
0.00
0.03
1.22
1.06
0.92
0.67
0.95
World
444
435
667
5,709
0.00
0.05
1.21
11
What Maddison’s data show
• Wide disparity in performance across regions:
– Group A: W.Europe, W. Offshoots, Japan
– Group B: Latin America, E.Europe & Former USSR, Asia (except Japan),
Africa
• Growth of p.c. income 4 times as fast in Group A as in Group
B.
–
–
–
–
Group B was ahead in 1000 (after fall of Roman Empire).
By 1820 p.c. income in Group A twice level in Group B.
By 1998 ratio had increased to 7:1
In 1998, p.c. income ratio between W.Offshoots and Africa more than
19:1. Africa today at W.European level of 1820
12
What Maddison’s data show
• For Group A countries, at least, Malthus was clearly
too pessimistic about the possibility of increasing
living standards in the long run
• TABLE 3: Changing regional shares of GDP:
– In 1000, Asia produced two-thirds of world GDP and
W.Europe less than 9%
– By 1820, W.Europe’s share 24%, Asia’s share 56%
– By 1998, Asia’s share 30%, W.Europe and W.Offshoots 46%
13
TABLE 3: Level and rate of growth of GDP: World and major
regions, 0-1998 A.D.
0
Western Europe
Western Offshoots
Japan
Total Group A
Latin America
E. Europe & USSR
Asia (excl Japan)
Africa
Total Group B
World
1000
1820
1998
(billion 1990 international dollars)
11.1
10.2
163.7
6,961
0.5
0.8
13.5
8,456
1.2
3.2
20.7
2,582
12.8
14.1
198.0 17,998
0-1000
100018201820
1998
(annual average growth)
-0.01
0.34
2.13
0.05
0.35
3.68
0.10
0.23
2.75
0.01
0.32
2.57
2.2
3.5
77.0
7.0
89.7
4.6
5.4
78.9
13.7
102.7
14.1
60.9
390.5
31.0
496.5
2,942
1,793
9,953
1,939
15,727
0.07
0.05
0.00
0.07
0.01
0.14
0.29
0.20
0.10
0.19
3.05
1.92
1.84
1.99
1.96
102.5
116.8
694.4
33,726
0.01
0.22
2.21
14
Europe’s Little Divergence, 15001820
• Maddison’s data break down developments
within Western Europe from 1500. Pattern is
sometimes described as the Little Divergence
• Italy had highest per capita income during
1000-1500
• After “voyages of discovery”, brief Iberian
boom, but opening up of Atlantic economy led
eventually to economic leadership of NW
Europe: first NL, then GB
15
TABLE 4: GDP per capita in UK and selected countries,
1500-1820 (1990 international dollars)
Belgium
France
Italy
Netherlands
Portugal
Spain
United Kingdom
Total Western Europe
1500
875
727
1,100
754
632
698
714
774
1600
976
841
1,100
1,368
773
900
974
894
1700
1,144
986
1,100
2,110
854
900
1,250
1,024
1820
1,319
1,230
1,117
1,821
963
1,063
1,707
1,232
16
2. BASIS OF THE POPULATION ESTIMATES
• Data from the past exist largely as a result of
government efforts to raise taxes
• China: bureaucracy kept population registers
going back more than 2000 years. Designed to
assess taxable capacity, also included
information on cultivated area and crop
production
• Roman Empire: conducted censuses for fiscal
purposes
17
Population
• England: Domesday Book 1086 extraordinarily
detailed survey of whole country, broken
down by estate.
• A number of economic historians have used
Domesday data to estimate English population
in 1086 (Russell, 1948; Darby, 1977)
• Others have also used Domesday Book to
estimate national income for England in 1086
(Snooks, 1995; Mayhew, 1995; Walker, 2015)
18
Population
• Parish registers in many countries record births,
marriages & deaths
• Decadal censuses now the norm in many countries
• Scope for disagreement small after 1700
• Even between 1000 and 1700, fair amount of
agreement between scholars
• There is some scope for improving on Maddison’s
population estimates, but it is probably more about
increasing the frequency of observations than
changing the trends
19
3. BASIS OF THE INCOME ESTIMATES
• For many countries, historical national accounts have
been reconstructed since about 1870
• Going back further in time, for “core” countries there
is quite a lot of hard evidence that can be derived
from archives:
– cultivated land use, crop yields and animal numbers from
farm accounts and tithe receipts
– population living in towns and labour force occupations
– extent of foreign trade
– wages, prices and real wage trends
– government spending and revenue
20
Basis of the income estimates
• However, despite encouraging economic historians
to produce GDP estimates based on hard data,
Maddison preferred to rely largely on “guesstimates”
for the pre-1870 period
• His approach was to use some basic assumptions,
particularly about the subsistence level of income,
and make some freehand adjustments on the basis
of the qualitative literature
• This is best understood if we consider how Maddison
made his international comparisons and established
the subsistence level of income
21
4. INTERNATIONAL COMPARISONS
• It is important to compare wages and GDP per
capita at Purchasing Power Parity (PPP)
• British wages will be in £, while US wages will
be in $
• Cannot simply compare at the exchange rate,
which may move to clear international asset
markets, rather than reflecting the price of
goods and services that people living in the 2
countries buy
22
International comparisons
• Compute the PPP by comparing prices of individual
products, weighted by their importance in the GDP
of the 2 countries
• Would get a different PPP if use UK weights rather
than US weights
• A compromise estimate is obtained by using the
geometric mean of UK and US weights
• However, a series of bilateral comparisons made this
way may not be transitive
23
International comparisons
• Maddison therefore chose to use a set of
international weights for comparing all
countries
• Most international comparisons are now
carried out in 1990 GK international dollars
(named after Geary and Khamis who derived
the weighting scheme)
24
1990 international dollars
• Using PPPs for 1990, we can convert GDP per capita
for all countries to 1990 international dollars
• This provides a convenient standard for comparing
per capita incomes over space and time
• World Bank standard in 1990 suggested “bare bones
subsistence” is $1 per day, or $365 per year
• Since any society has a rich elite, minimum average
per capita income for any society likely to be around
$400
• This is widely regarded as “bare bones subsistence”
25
1990 international dollars
• Now look at the early observations in the
Maddison data set and notice how many are
at or very close to $400 in the early years
• Better off economies are put slightly above
this level, at $425 or $450
• Observations between 1000 and 1820 are
then more or less drawn in freehand, so as to
conform to Maddison’s views on the major
controversies in global economic history
26
5. INTERNATIONAL COMPARISONS BEFORE
1870: THE GREAT DIVERGENCE DEBATE
• A central issue in international comparisons before
1870 concerns the Great Divergence of living
standards between Europe and Asia
• But which Asian regions should be compared with
which European countries?
• Maddison compares W.Europe with China, but the
Yangzi Delta region of China may not have been so
far behind even by 1800
27
Maddison’s Great Divergence
• Pomeranz claims the Yangzi delta was on a par
with GB & NL in 1800, but this has not been
widely accepted
• Maddison’s figures for W.Europe and China
show a more conventional picture (TABLE 5):
– After the fall of the Roman Empire, W.European
p.c. income fell to a low point circa 1000.
– Chinese incomes were stagnant, so W.Europe fell
behind
28
TABLE 5: Comparative levels of GDP per capita in China and
Western Europe, 400-1998 A.D. (1990 international dollars)
400
700
1000
1300
1500
1700
1820
1870
1913
1950
1973
1998
W. Europe
450
400
400
600
774
1,024
1,232
1,974
3,473
4,594
11,534
17,921
China
450
450
450
600
600
600
600
530
552
439
839
3,117
29
Maddison’s Great Divergence
– P.c. income in W.Europe began to grow from C11th,
led by N.Italian city states (esp. Venice), then
Portugal & Spain, then NL, then GB
– A growth rate of 0.14% p.a. was not very fast but
by 1820 p.c. income in W.Europe had tripled
(compound interest)
– Chinese p.c income also grew between 1000 and
1300, but more slowly than W.Europe. So
W.Europe caught up with China by C14th
30
Maddison’s Great Divergence
– Chinese p.c. income then stagnated until 1820.
Initially due to internal policies and institutions
(e.g. self-imposed isolation), then reinforced by
colonial exploitation by West
– China fell far behind as W.Europe continued to
grow. By 1820, p.c. income in W.Europe twice
Chinese level
– From early 19th to mid-20th century, Chinese p.c.
income fell, while W.European growth accelerated
31
Maddison’s Great Divergence
– By 1950, W.Europe’s p.c. income more than 10
times Chinese level
– Since 1950, and esp since 1973, China has been
catching up. By 1998, W.European income level
less than 6 times Chinese level
32
6. IMPROVING ON MADDISON
• Many of Maddison’s GDP per capita observations
before 1820 are “guesstimates”, but it doesn’t have
to be this way
• Since Maddison died in 2010, the Maddison Project
has begun the process of improving upon the original
Maddison data set
• Bolt and van Zanden (2014) represents the first
round of improvement, and incorporates a number
of series for the pre-1820 period based on hard data
• Figure 2 shows the results for 4 European economies
33
TABLE 6: GDP per capita levels in Europe (1990 international
dollars)
1750
1800
England/
GB
754
759
755
777
1,090
1,055
1,114
1,143
1,123
1,100
1,630
1,563
1,710
2,080
1820
1850
2,133
2,997
1086
1270
1300
1348
1400
1450
1500
1570
1600
1650
1700
Holland/
NL
876
1,245
1,432
1,483
1,783
2,372
2,171
2,403
2,440
2,617
1,752
1,953
2,397
Italy
Spain
1,482
1,376
1,601
1,668
1,403
1,337
1,244
1,271
1,350
957
957
1,030
885
889
889
990
944
820
880
1,403
1,244
910
962
1,376
1,350
1,087
1,144
Sources: Broadberry et al. (2015); van Zanden and van Leeuwen (2012);
Malanima (2011); Alvarez-Nogal and Prados de la Escosura (2013)
34
Improving on Maddison
• The most obvious change is that levels of per
capita income were substantially higher in
1500 than suggested by Maddison
• Projecting back further suggests that per
capita incomes in Western Europe were
already well above bare bones subsistence in
the 13th century, and indeed even earlier
– English p.c. GDP in 1086 was about the same as in
1300
35
Improving on Maddison
• In the second half of this lecture, we will
explore the new British historical national
accounts:
– Explain where the estimates come from
– Explore the implications for understanding the
transition to modern economic growth
36
TOPIC 1: ECONOMIC GROWTH, 1000-1870
LECTURE OUTLINE
•
•
•
•
•
•
•
•
•
B. BRITISH ECONOMIC GROWTH
1. Agriculture
2. Industrial Output
3. Services
4. Real GDP
5. Population and GDP per capita
6. Consumption and Output
7. Income and Output-Based Measures
8. Britain in a Comparative Perspective
37
B. BRITISH ECONOMIC GROWTH
• Broadberry, Campbell, Klein, Overton & van
Leeuwen (2011; 2015): Reconstruction of
national income in Britain, 1270-1870
• GDP estimates combined with population data
to derive per capita GDP
• Provides a unified framework for addressing
the key issues of British economic history
before and during the transition to modern
economic growth
38
39
Results
• Annual growth rate of GDP per capita 0.17% 12701700 cumulates to doubling of living standards
• Annual growth rate of GDP per capita 0.48% 17001870, cumulates to a further doubling of living
standards
• If project back from 1850 level, per capita income in
late Middle Ages around $1,100 in 1990 prices, well
above “bare bones subsistence” ($400)
• High share of livestock agriculture already in late
Middle Ages, providing varied diet rather than high
level of kilocalories
40
Contrast with Clark
• Clark (2010): “A Farewell to Alms argued that
England in 1800 was no richer than the average
hunter-gatherer society, and no richer than preindustrial England through most of its history
since 1200.”
• International comparative framework: if nothing
happened between 1200 and 1800, how did
Britain go from being an economic backwater to
the centre of the global economy?
41
Kalahari bushmen
42
England circa 1200
43
England circa 1800
44
1. AGRICULTURE
• Data sources for 3 periods yield information
on land use, arable yields, animal stocking
densities etc:
– Medieval period: Bruce Campbell’s Manorial
Accounts Database
– Early modern period: Mark Overton’s Probate
Inventories Database
– Modern period: Turner, Beckett and Afton’s farm
accounts database
45
Agricultual output trends
• FIGURE 1: Constant price output for arable
and livestock sectors
• Medieval period: arable output trended down,
livestock output stable. Total agricultural
output showed modest decline
• From mid-C16th livestock first grew slower
then faster than arable from mid-C17th
• Total agricultural output growth increased but
only modestly
46
FIGURE 1: Indexed output in English arable and
livestock agriculture (log scale, 1700=100)
640
arable output
pastoral output
320
160
80
40
20
10
1270
1370
1470
1570
1670
1770
1870
47
Share of livestock agriculture
• Share of livestock sector rising in constant price
terms, but with setback 1450-1650
• Price of livestock products declined relative to
arable products 1450-1650, so share of livestock
sector declined much further in current prices
• Note very high share of livestock sector in late
medieval period in both current and constant
prices
• Although kilocalories per person not particularly
high, expensive kilocalories (meat, dairy produce,
ale)
48
TABLE 5: Output shares in English agriculture, in current prices,
10-year averages (%)
1270s
1300s
1350s
1400s
1450s
1550s
1600s
1650s
1700s
1750s
1800s
1850s
1860s
Current prices
Arable
Pastoral
60.1
39.9
51.2
48.8
48.8
51.2
46.3
53.7
38.4
61.6
58.1
58.1
64.5
59.7
57.8
48.5
44.8
40.0
41.9
41.9
35.5
40.3
42.2
51.5
55.2
60.0
Constant 1700 prices
Arable
Pastoral
69.2
30.8
66.4
33.6
53.3
46.7
57.5
42.5
53.1
46.9
60.5
58.8
64.0
61.5
54.6
45.3
44.2
44.3
39.5
41.2
36.0
38.5
45.4
54.7
55.8
55.7
49
FIGURE 2: Indexed output of agriculture, industry and services,
England (1270-1700) and Great Britain (1700-1870), (log scale, 1700 =
100)
2048
1024
512
256
128
64
agricultural output
32
industrial output
16
services output
8
4
1270
1310
1350
1390
1430
1470
1510
1550
1590
1630
1670
1710
1750
1790
1830
1870
50
2. INDUSTRIAL OUTPUT
• ENGLAND, 1270-1700
• Volume measures available for key industries,
combined with value added weights for c.
1700
• Sharp decline across Black Death clearly
visible, but stability as population declined
further
• Return to strong growth after 1500
51
Industrial output in GB, 1700-1870
• Our industrial production index very close to
Crafts/Harley “revised best guess index”
• Slower growth than Hoffmann index, which
over-weighted cotton
• Output growth accelerated from 1760s to
1830s before tapering off
52
3. SERVICES
• ENGLAND, 1270-1700
• Deane & Cole approach:
– government (state finance data)
– commerce (volume indicators)
– housing and other services (grew in line with
population)
• Services trended down with population after
Black Death before picking up strongly
between 1500 and 1650
53
Services in GB, 1700-1870
• Deane & Cole approach again
• Results broadly consistent with Crafts, but
annual frequency
• Increase in growth rate from 1780s
54
4. REAL GDP
• Sectoral output weights derived by reflating
real output data with sectoral price indices
and projecting back in time from 1841 shares
• Before 1700, agricultural, industrial and
service prices tended to move together over
the long run but with some significant shorter
swings
• After 1700, industrial prices declined sharply
relative to other prices
55
FIGURE 3: Aggregate and sectoral price indices, England (12701700), Great Britain (1700-1870), (log scale, 1700=100)
512
agriculture
256
industry
services
128
GDP deflator
64
32
16
8
1270
1320
1370
1420
1470
1520
1570
1620
1670
1720
1770
1820
1870
56
Real GDP
• Sectoral weights provided for benchmark
years where labour force data also available
for cross-checking
• Agriculture’s share declined, while services
increased the most, particularly after 1700
when relative price of industrial goods fell
sharply
• But industry grew fastest in constant price
terms, both before and after 1700
57
TABLE 9: Sectoral shares in current price GDP, 12701870 (%)
Year
1381
1522
1600
1700
1759
1801
1841
Region
England
England
England
England & Britain
Britain
Britain
Britain
Agriculture
45.5
39.7
41.1
26.7
29.7
31.3
22.1
Industry
28.8
38.7
36.2
41.3
35.2
32.7
36.4
Services
25.7
21.6
22.7
32.0
35.1
36.0
41.5
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
58
5. POPULATION AND GDP PER
CAPITA
• ENGLISH POPULATION
• English population before 1541 controversial
• We use data on trends in individual manors or parishes
c.1317-1541, building on the approach of Hallam for
the period 1086-1317
• Peak medieval population 4.81 million in 1348, above
Overton and Campbell’s estimate of 4.0 to 4.5 million
but well below Richard Smith’s 6 million
• National accounts perspective: difficult to see how
many more could have been fed, given food availability
59
English population, 1250-1700
Year
1250
1290
1300
1315
1348
1351
1377
Total
population
4.23
4.75
4.73
4.69
4.81
2.60
2.50
Year
1400
1450
1490
1560
1600
1650
1700
Total
population
2.08
1.90
2.14
3.02
4.11
5.31
5.20
60
Real GDP per capita in England, 12701700
• Modest positive per capita income growth
1270-1700, at average annual rate of 0.17%
– 1270s-1340s: stationarity of p.c. income
– 1340s-1400s: strong growth after Black Death
– 1400s-1650s: plateau
– 1650s-1690s: return to growth
61
FIGURE 4: Indexed GDP, population, and per capita GDP,
England (1270-1700) and Great Britain (1700-1870): (log scale,
1700 = 100)
1,024
512
256
128
64
GDP
population
32
GDP/cap
16
1270
1310
1350
1390
1430
1470
1510
1550
1590
1630
1670
1710
1750
1790
1830
1870
62
Real GDP per capita in Great Britain,
1700-1870
• Per capita income growth averaged 0.48%
between 1700s and 1860s, but again episodic:
– 1700s-1830s: growth slower than during 2nd half
of C17th
– From 1830s: sharp acceleration, p.c. income
growth comfortably exceeding 1% for first time
63
6. CONSUMPTION AND OUTPUT
• Can check level of consumption per head in
kilocalories
• Livi-Bacci: need 2,000 kilocalories per day, but some
of this from home-raised and wild sources
• Slavin estimates 300 kcals from poultry, fish etc.
before Black Death, 200 kcals thereafter, which
matches with estimates for c.1900 from Prest
• Note that total kcals per head does not trend
upwards, but remains constant at around 2,000.
Improvements to diet come through growing share
of meat and growth in the extent of processing
64
Per capita daily kilocalorie consumption of major
arable crops and animal products in England
1270/79
1300/09
1310/19
1380/89
1420/29
1450/59
1600/09
1650/59
1700/09
1750/59
1800/09
1830-09
1840/49
1850/59
1861/70
Population
(millions)
Kcal net
of seed
4.40
4.72
4.63
2.36
2.03
1.93
4.27
5.35
5.26
6.07
9.06
13.83
15.58
17.47
20.07
3,628
3,017
2,938
4,170
3,662
3,594
3,226
3,026
3,451
4,051
3,337
2,825
2,908
2,382
2,233
Arable
% food Kcal from
Kcal net
grain
of seed, extraction
imports
rate
losses &
fodder
0
49
1,771
0
53
1,610
0
53
1,561
0
49
2,056
0
46
1,702
0
47
1,698
0
52
1,677
0
51
1,540
0
51
1,752
20
42
1,709
166
42
1,414
157
45
1,279
304
46
1,342
516
44
1,050
917
45
1,013
Kcal from
poultry,
fish
300
300
300
200
200
200
200
200
200
200
200
200
200
200
200
Pastoral
Kcal from Kcal from
meat
meat &
imports
dairy
produce
0
117
0
131
0
122
0
191
0
230
0
264
0
206
0
169
0
210
0
319
0
385
0
311
6
308
10
328
22
320
Total
Kcal
2,188
2,041
1,983
2,447
2,132
2,162
2,082
1,909
2,162
2,248
2,165
1,947
2,160
2,104
2,471
65
Consumption
• English society under pressure in half century before Black Death. Difficult
to see how bigger population could have survived
• Further periods of pressure in C17th as population recovered and early
C19th before substantial grain imports
• Large livestock sector provided varied diet but not many more kilocalories,
so English population does not seem well off if assess living standards in
terms of kilocalories
• But large proportion of population able to consume meat, dairy produce
and ale
• In a strongly Malthusian economy, with real wages driven down to bare
bones subsistence, bulk of population would derive most of their
kilocalories from inferior grains with little processing (e.g. oatmeal)
• Social tables suggest 24.2% unable to afford respectability basket in 1688,
39% in 1290
66
7. INCOME AND OUTPUT-BASED
MEASURES
• Per capita GDP plotted together with real
wages of unskilled building workers in FIGURE
5
• There are differences between the Clark and
Allen series, but bigger difference is between
both real wage series and GDP per capita
• 2 main periods of divergence: “golden age” of
C15th and “Engels’ pause” of 2nd half of C18th
67
FIGURE 5: Indexed daily real wage of an unskilled building
worker and GDP per capita (10-year moving averages, mean of
1270-1870=100, log scale)
320
160
80
Allen
Clark
40
GDP/cap
20
1270
1320
1370
1420
1470
1520
1570
1620
1670
1720
1770
1820
1870
68
Golden Age of C15th and Engels’
Pause
• Real wages increased faster than GDP p.c.
1340s-1450s then declined between 1450s
and 1650s while GDP p.c. remained stable
• Peak wage rates of mid-C15th not seen again
before mid-C19th, hence important in creating
impression of no long run progress
• During 2nd half of C18th, real wages flatlined
while GDP p.c. continued to grow steadily
69
Real wages and GDP per capita
• Angeles (2008) relates changes in real wages
to changes in GDP p.c., labour’s share of
income, labour supply per person and relative
prices:
(𝑤 /𝑝 𝐶 )1
(𝑤 /𝑝 𝐶 )0
=
−1
−1
𝐶
𝑌
(𝑌/𝑁)1 (𝛼 1 ) (𝐿/𝑁)1
(𝑝 /𝑝 )1
(𝑌/𝑁)0 (𝛼 0 ) (𝐿/𝑁)0
(𝑝 𝐶 /𝑝 𝑌 )0
70
Real wages and GDP per capita
• Daily real wage could stagnate while GDP per
capita increases if:
• (1) Labour’s share of national income falls
• (2) People work more days per year
• (3) Price of basic consumption goods rises
relative to price of all goods
71
Real wages and GDP per capita
• TABLE 11: Uses the Angeles decomposition to
simulate change in annual days worked, given
trends in real wages, GDP p.c., labour’s share
and relative prices
• Results for 1750s-1800s consistent with those
of Angeles: labour supply is most important
factor in reconciling positive p.c. GDP growth
with falling real wages, although rising relative
price of consumer goods also plays a role
72
TABLE 11: Explaining the divergence between GDP per
capita and real wages (1700=100)
Real wage (w/pC)
GDP per capita (Y/N)
Labour’s share (α)
Relative prices (pC/pY)
Simulated labour supply
(L/N)
1300s–
1340s
5.5
2.8
-5.1
4.4
-11.5
Percentage change over the period
1340s– 1450s– 1650s– 1750s–
1450s
1650s
1750s
1800s
75.0
-50.4
15.2
-3.6
30.6
4.2
48.3
19.6
15.3
-8.5
-1.7
-0.2
-6.4
8.0
-0.7
9.2
-8.0
78.0
27.4
13.4
1800s–
1860s
59.7
46.5
12.1
1.6
1.2
73
“Golden Age” of C15th
• 1340s to 1450s: real wages able to grow faster
than GDP per capita mainly because of
labour’s rising share, but also because food
was becoming relatively cheap
• 1450s to 1650s: GDP p.c. stable while real
wages fell largely because of “industrious
revolution”
• Subsidiary roles for increase in relative price of
food and fall in labour’s share
74
Variations in Labour Supply
• TABLE 12: Independent estimates of days
worked per year broadly consistent with this
picture of an industrious revolution
• Voth uses court records to suggest sharp
increase between 1760 and 1800
• Clark and van der Werf use daily and annual
wage rates to suggest similar scale of increase,
but more gradual process
75
TABLE 12: Estimates of annual days worked per person
Period
1433
1536
1560-1599
1578
1584
1598
1600-1649
1650-1699
1685
1700-1732
1733-1736
1760
1771
1800
1830
1867-1869
1870
Blanchard/Allen
and Weisdorf
165
180
Clark and
van der Werf
Voth
257
260
210
259
266
276
312
286
295
258
280
333
336
293-311
318
76
Variations in Labour Supply
• Allen and Weisdorf use Blanchard’s data on workers
who combined farming and mining in the Mendips to
show similar level of days worked in late C16th to
Clark and van der Werf
• Also show much smaller number of days worked in
period before post-Reformation reduction in holy
days
• Growth of annual incomes thus consistent with
stagnation in daily real wages because of
“industrious revolution”
77
8. BRITAIN IN A COMPARATIVE
PERSPECTIVE
• Projecting back from Maddison’s 1850 figure of
p.c. income in 1990 international dollars suggests
for Late Middle Ages a figure of around $1,100
• This is well above Maddison’s $400 subsistence
income, observed for many poorer countries in
20th century
• Little Divergence: Holland and then GB forged
ahead of Italy and Spain during C17th and C18th
• Asian GDP per capita already much lower in early
modern period
78
GDP per capita levels in 1990 international dollars
England/
GB
725
900
980
1020
1050
1086
1120
1150
1280
1300
1348
1400
1450
1500
1570
1600
1650
1700
1750
1800
1850
Holland/
NL
Italy
Spain
Japan
China
India
551
476
1,247
1,518
1,458
1,204
1,063
754
679
755
777
1,090
1,055
1,114
1,143
1,123
1,110
1,563
1,710
2,080
2,997
876
1,245
1,432
1,483
1,783
2,372
2,171
2,403
2,440
1,752
2,397
1,482
1,376
1,601
1,668
1,403
1,337
1,244
1,271
1,350
1,403
1,244
1,350
957
957
1,030
885
889
889
990
944
820
880
910
962
1,144
508
552
552
605
619
597
622
703
777
960
983
1,127
968
977
841
685
597
594
682
638
622
573
569
556
79
Europe before the Industrial
Revolution
• Importance of mixed agriculture with a large livestock
sector in North Sea area
• This meant production had a number of characteristics
important for development:
–
–
–
–
high value added
capital intensive
non-human energy intensive
enhanced employment opportunities for females,
underpinning European marriage pattern
• NW Europe pulled ahead as these production
techniques spread to industry and services and EMP
encouraged human capital formation
80