FACTOR PRICES AND INCOME DISTRIBUTION IN LESS INDUSTRIALISED ECONOMIES 1870–1939

Global trade expansion after 1870 had potentially powerful effects on income distribution, especially in land-abundant less industrialised economies, by increasing land prices relative to wages. The papers in this issue add evidence on wage–rentals for a range of countries, specifically Australia, Canada, Ghana, India, and Sweden. These new data offer partial support for Jeffrey Williamson's view that the distributional effects of booming global trade to 1914 were powerful and ubiquitous, but they highlight that more attention might be given to geographical boundaries and to other distribution forces including technology and wage bargaining conditions.     

REFRIGERATION AND DISTRIBUTION: NEW ZEALAND LAND PRICES AND REAL WAGES 1873–1939

The responses in New Zealand to the opportunities of refrigeration transformed farming in the Dominion during the half-century from 1890. Closer settlement and the extension of the cultivated area combined with more intensive farming methods to increase land productivity and real gross domestic product capita to the extent that living standards in New Zealand measured by the Human Development Index ranked first in the world by 1913. In contrast, real wages in the Dominion stagnated. The refrigeration-related trade boom had powerful income distribution effects that increased sharply the land rental–wage ratio during the years to 1920. Widely diffuse land ownership in New Zealand tempered the rise in income inequality, to set the Dominion apart from other land-abundant economies of the periphery.     

The question of land access and the Spanish land reform of 1932

Spanish land reform, involving the breakup of the large southern estates, was a central issue during the first decades of the twentieth century, and was justified on economic and political grounds. This article employs new provincial data on landless workers, land prices, and agrarian wages to consider whether government intervention was needed because of the failure of the free action of markets to redistribute land. Our evidence shows that the relative number of landless workers decreased significantly from 1860 to 1930, before the approval of the 1932 Land reform during the Second Republic (1931–6). This was due to two interrelated market forces: the falling ratio between land prices and rural wages, which made plots of land cheaper for landless workers to rent and buy; and structural change that drained the rural population from the countryside Given that shifts in factor prices were already helping workers gain access to land by the 1930s, the economic arguments for introducing reform at that time remain unclear.     

LABOUR AND LAND IN GHANA, 1874–1939: A SHIFTING RATIO AND AN INSTITUTIONAL REVOLUTION

The Second Industrial Revolution created markets for new products for Ghana, rubber and then cocoa beans. Mechanised transport spurred the spread of cocoa planting. The paper estimates the resultant shift in factor ratios, and synthesises the data for prices of land-use rights and wages as the economy moved from land abundance to localised land scarcity. The consequences for factor markets were institutional rather than simply quantitative. For the first time markets in land use rights became widespread, while hired labour and farm pledging replaced slavery and debt bondage, as cocoa income made it possible for farmers to offer labourers sufficient inducement to enter the labour market.     

MEASURING INEQUALITY TRENDS IN COLONIAL AUSTRALIA USING FACTOR–PRICE RATIOS: THE IMPORTANCE OF BOUNDARIES

Previous research on nineteenth century globalisation argues that during the second half of that century wage–rental ratios in labour scarce, land-abundant new world economies decreased. This suggests inequality rose in the new world. Australia has been cited as a conspicuous example of this trend. The paper re-examines this argument using disaggregated land and wage data for four Australian colonies. We reveal large regional differences in both factor–price levels and trends – something that has been overlooked when discussing Australian colonial inequality and we suggest that regional disparities in other nineteenth century economies are also likely to be important.     

最低工资制讨论中的几个热点问题

到2004年底,我国31个省(自治区、直辖市)全部建立了最低工资制度。目前,国家对最低工资标准与职工平均工资水平的比例关系没有统一的规定,国际上也不存在单独根据社会平均工资一定比例确定最低工资标准的所谓“社会平均工资法”,判断一个地区最低工资标准是否合理,要全面综合考虑。我国各地区工资标准差距客观存在,根本原因是我国经济发展不平衡。     

Spatial spillovers of regional wages: Evidence from Chinese provinces

This study investigates the effects of spatial interactions on local wages based on a panel data from 31 Chinese provinces between 2001 and 2010. Using the Global Moran's I statistic, we provide empirical evidence for the presence of spatial dependencies in provincial wages. Then, we estimate the provincial wage equation using a spatial panel model that controls for spatial heterogeneity and spatial interdependence as well as other regional characteristics. The empirical results show that spatial wage spillover plays an important role in the determination of local wages. Furthermore, we find that human capital and economic growth are two underlying forces strengthening wage spillovers across provinces.     

What constrains mechanization in Chinese agriculture? Role of farm size and fragmentation

Rising real wages create an incentive for relatively large landholders to increase their scale of operations allowing them to mechanize and save labor (or to allow farmers to work more off farm). Using panel data collected in 2000 and 2008 from 951 farm households in 6 provinces in China, the empirical analysis shows that (i) changes in the willingness to pay to rent in land is systematically related to real off-farm wage growth and the relationship depends on the initial farm size, and (ii) the introduction of machines to substitute for labor became active in the areas where real wages increased fast but was significantly constrained by land size per plot (and the number of plots), that is, land fragmentation. Our results imply that when real wages rapidly increase and labor shortage becomes serious, fragmented land holdings significantly constrain the decision to mechanize and consolidating fragmented lands can lead to higher efficiency through mechanization.     

Globalization,agricultural markets and mass migration: Italy, 1881–1912

Despite the significant attention paid to the current consequences of globalization for migration behavior, there are few historical accounts of the effect of commodity market integration at the local level. We set our paper within the context of the first globalization era, when migration flows were largely unregulated, and highlight how exogenous shocks in agricultural commodity prices influenced international migration flows from Italian provinces between 1881 and 1912. To do this, we construct an index of global price exposure based on the initial provincial agricultural production structures. Our analysis quantifies the contribution of globalization-induced agricultural-price shocks to migration decisions, alongside more traditional explanatory factors such as migrant networks and landholding systems. We find evidence that agricultural-price shocks are positively related to the propensity to migrate, as migration tended to increase in proportion with agricultural commodity prices. This result suggests that liquidity constraints were binding until agricultural incomes reached a certain threshold. These findings can inform our understanding of present-day migration responses in developing countries in the face of even more rapid globalization but higher barriers to legal migration.     

Regional wage convergence in Spain 1850–1930

This paper presents a new regional database on real wages for Spain from 1850 to 1930. This evidence is used to analyze the evolution of wages across regions and occupations. Substantial wage convergence occurred from 1850 to 1914, despite low rates of internal migration. World War I and the subsequent globalization backlash were associated with a spectacular increase in wage differentials. However, real wage convergence across Spanish provinces resumed during the 1920s, this time accompanied by high rates of internal migration.     

The Dynamic Behavior of Wages and Prices: Cointegration Tests within a Large Macroeconomic System

The dynamic relationship between wages and prices has long held a central place within the economic literature. Most macroeconomic models make assumptions as to the causal relationship between the two variables. Unfortunately, empirical investigations have produced widely divergent results. In particular, the present paper examines the results of time-series studies and argues that the lack of a consensus is due to improperly specified models. Once the wage-price relationship is embedded within a multiple vector system, identification of a wage-price cointegrating relationship is significantly improved. In addition, the increased efficiency yields evidence in favor of the dual feedback between wages and prices.     

Gold, credit, and mortality: distinguishing deflationary pressures on the late medieval English economy

This article uses national and local records of debt and evidence from coins, prices, and wages to discuss the economic effects of the gold coinage that was introduced into England in 1344. It distinguishes between the deflationary effects of gold and those of the falling population on prices and credit, and shows that a coinage dominated by gold reduced the volume of credit and transactions far more than the mortality rate and the total circulation of coin would indicate was likely. It relates these findings to the economic and social changes of the fifteenth century.     

RECOVERY FROM DEPRESSION: AUSTRALIA IN AN ARGENTINE MIRROR 1895–1913

The recovery from the 1890s depression in Australia was prolonged, and economic growth from 1895 to 1913 was below that in the comparable settler economies of Argentina and Canada. Why? Australia’s hesitant initial recovery is typically attributed to the imbalances in the economy resulting from the preceding boom, and its further delay to severe drought. Drawing on Argentine experience, it is suggested that additional factors need to be considered. Unlike Argentina, the unwillingness or inability of Australian governments to reschedule foreign debt or devalue the exchange rate exacerbated the slump. And the era of low‐cost pioneer farming ended earlier than in Argentina (or Canada).     

The evolution of wages in early modern Normandy (1600–1850)

This article presents new estimates of wages for Normandy between 1600 and 1850. We use a vast array of primary and secondary sources to assemble two new databases on wages and commodity prices to establish a new regional consumer price index (CPI) and twelve regional wage series. We find that unskilled labourers earned similar wages across the agricultural, maritime, and textile sectors. Historical evidence suggests that Norman employers grappled with a tight labour market, which placed more pressure on wage increases. We posit that this situation is best explained by the combination of the early fertility transition, resulting in slow demographic growth and the rapid development of the textile industry accelerated by the arrival of cotton. Finally, we also provide tentative evidence suggesting that labourers with stable employment could have earned a little less than their English counterparts during this period.     

Trends in real wages during the industrial revolution: a view from across the Irish Sea

This article calculates cost of living indices for Ireland between 1785 and 1870 and real wage indices for agricultural labourers, textile workers, and building workers. These indices show gains in real wages which are not consistent with current hypotheses about widespread pre-Famine immiseration, though textile workers did experience a reduction in earning power. Before the Famine, wages proved sticky downwards in the face of falling prices; after the Famine, money wages rose faster than prices. A revised UK index suggests that real wages began their increase earlier, in the 1820s, and increased by around an additional 10 percentage points by 1870.     

Baumol's Law and Verdoorn's Regularity

This paper tests the laws of Verdoorn and Baumol for the Netherlands in order to assess whether these laws provide an appropriate framework to interpret developments of output, employment, and wages and prices in the manufacturing industry and the services sector. The empirical evidence is not conclusive with respect to Verdoorn's law, but strongly supportive of Baumol's law.     

Between conquest and independence: Real wages and demographic change in Spanish America, 1530–1820

On the basis of a newly constructed dataset, this paper presents long-term series of the price levels, nominal wages, and real wages in Spanish Latin America – more specifically in Mexico, Peru, Bolivia, Colombia, Chile, and Argentina – between ca. 1530 and ca. 1820. It synthesizes the work of scholars who have collected and published data on individual cities and periods, and presents comparable indices of real wages and prices in the colonial period that give a reasonable guide to trends in the long run. We show that nominal wages and prices were on average much higher than in Western Europe or in Asia, a reflection of the low value of silver that must have had consequences for competitiveness of the Latin American economies. Labour scarcity was the second salient feature of Spanish Latin America and resulted in real wages much above subsistence and in some cases (Mexico, Bolivia, Argentina) comparable to levels in Northwestern Europe. For Mexico, this was caused by the dramatic decline of the population after the Conquest. For Bolivia, the driving force was the boom in silver mining in Potosi that created a huge demand for labour. In the case of Argentina, low population density was a pre-colonial feature. Perhaps due to a different pattern of depopulation, the real wages of other regions (Peru, Colombia and Chile) were much lower, and only increased above subsistence during the first half of the 18th century. These results are consistent with independent evidence on biological standards of living and with estimates of GDP per capita at the beginning of the 19th century.     

The Linkage between Prices,Wages, and Labor Productivity: A Panel Study of Manufacturing Industries

This article investigates the long-run relationship between prices and wage-adjusted productivity as well as between real wages and average labor productivity at the industry level for a panel of 459 U.S. manufacturing industries over the period 1956-1996. Panel reintegration test results strongly reject the null of no reintegration in the panel between both prices and wage-adjusted productivity and between labor productivity and real wages for many (but not all) industries. Granger-causality tests show that prices are weakly exogenous and cause movements in unit labor cost. Bidirectional Granger causality is found between real wages and productivity; however, a one-to-one relationship is strongly rejected between real wages and productivity. Increases in labor productivity are associated with a less than unity increase in real wages.     

Inflation as the lesser evil

Abstract

The authors of this analysis of the German inflation seek to show the interdependence between the various factors which made that hyper-inflation possible, and the effects of the inflation on production, employment and the distribution of incomes. They reject an explanation of the German inflation in terms of the quantity theory which was widely held in the inter-war years. Instead they attempt to explain developments by showing the inter-relationship between the balance of payments, rates of exchange and the trend of internal prices and wages. According to this balance of payments theory, the supply of money will passively adjust itself to a rise in the level of prices and wages, the government budgetary deficit brought about by the faster rate of increase in prices and wages than in tax revenue being financed inter alia by the issue of notes.     

Does local governments’ budget deficit push up housing prices in China?

Budget deficit has been a common fiscal pressure facing Chinese cities since the 1994 fiscal reform. Meanwhile, land lease sales have become a significant off-budgetary revenue to local governments since 2003. This paper investigates whether financing budget deficit is an important driving force of the recent soaring housing prices when local governments function as the monopoly supplier of urban land. A conceptual framework is developed to illustrate a transmission mechanism from budget deficit to housing prices. This leads to an empirical model consisting of two simultaneous structural equations for housing prices and land prices. Using data for the 35 major Chinese cities from 2003 to 2011, an empirical exercise shows that although budget deficit has a positive effect on land prices, it is the factors from demand side, such as amenities, income and the user cost of housing capital, that have been pulling up the housing prices.