Industrial, regional, and gender divides in British unemployment between the wars

By Meredith M. Paker (Nuffield College, Oxford)

This blog is part of a series of New Researcher blogs.

A view from Victoria Tower, depicts the position of London on both sides of the Thames, 1930. Available at Wikimedia Commons.

‘Sometimes I feel that unemployment is too big a problem for people to deal with … It makes things no better, but worse, to know that your neighbours are as badly off as yourself, because it shows to what an extent the evil of unemployment has grown. And yet no one does anything about it’.

A skilled millwright, Memoirs of the Unemployed, 1934.

At the end of the First World War, an inflationary boom collapsed into a global recession, and the unemployment rate in Britain climbed to over 20 per cent. While the unemployment rate in other countries recovered during the 1920s, in Britain it remained near 10 per cent for the entire decade before the Great Depression. This persistently high unemployment was then intensified by the early 1930s slump, leading to an additional two million British workers becoming unemployed.

What caused this prolonged employment downturn in Britain during the 1920s and early 1930s? Using newly digitized data and econometrics, my project provides new evidence that a structural transformation of the economy away from export-oriented heavy manufacturing industries toward light manufacturing and service industries contributed to the employment downturn.

At a time when few countries collected any reliable national statistics at all, in every month of the interwar period the Ministry of Labour published unemployment statistics for men and women in 100 industries. These statistics derived from Britain’s unemployment benefit program established in 1911—the first such program in the world. While many researchers have used portions of this remarkable data by manually entering the data into a computer, I was able to improve on this technique by developing a process using an optical-character recognition iPhone app. The digitization of all the printed tables in the Ministry of Labour’s Gazette from 1923 through 1936 enables the econometric analysis of four times as many industries as in previous research and permits separate analyses for male and female workers (Figure 1).

Figure 1: Data digitization. Left-hand side is a sample printed table in the Ministry of Labour Gazette. Right-hand side is the cleaned digitized table in Excel.

This new data and analysis reveal four key findings about interwar unemployment.  First, the data show that unemployment was different for men and women. The unemployment rate for men was generally higher than for women, averaging 16.1 percent and 10.3 per cent, respectively.  Unemployment increased faster for women at the onset of the Great Depression but also recovered quicker (Figure 2). One reason for these distinct experiences is that men and women generally worked in different industries. Many unemployed men had previously worked in coal mining, building, iron and steel founding, and shipbuilding, while many unemployed women came from the cotton-textile industry, retail, hotel and club services, the woolen and worsted industry, and tailoring.

Figure 2: Male and female monthly unemployment rates. Source: Author’s digitization of Ministry of Labour Gazettes.

Second, regional differences in unemployment rates in the interwar period were not due only to the different industries located in each region. There were large regional differences in unemployment above and beyond the effects of the composition of industries in a region.

Third, structural change played an important role in interwar unemployment. A series of regression models indicate that, ceteris paribus, industries that expanded to meet production needs during World War I had higher unemployment rates in the 1920s. Additionally, industries that exported much of their production also faced more unemployment. An important component of the national unemployment problem was thus the adjustments that some industries had to make due to the global trade disturbances following World War I.

Finally, the Great Depression accelerated this structural change. In almost every sector, more adjustment occurred in the early 1930s than in the 1920s. Workers were drawn into growing industries from declining industries, at a particularly fast rate during the Great Depression.

Taken together, these results suggest that there were significant industrial, regional, and gender divides in interwar unemployment that are obscured by national unemployment trends. The employment downturn between the wars was thus intricately linked with the larger structural transformation of the British economy.

Meredith M. Paker

Twitter: @mmpaker

Britain’s inter-war super-rich, the 1928/9 ‘millionaire list’.

by Peter Scott (Henley Business School at the University of Reading)

The roaring 1920s. Available at <;

Most of our information on wealth distribution and top incomes is derived from data on wealth left at death, recorded in probates and estate duty statistics. This study utilises a unique list of all living millionaires for the 1928/9 tax year, compiled by the Inland Revenue to estimate how much a 40 per cent estate duty on them would raise in government revenue. Millionaires were identified by their incomes (over £50,000, or £3 million in 2018 prices), equivalent to a capitalised sum of over £1 million (£60 million in 2018 prices). Data for living millionaires are particularly valuable, given that even in the 1930s millionaires often had considerable longevity, and data on wealth at death typically reflected fortunes made, or inherited, several decades previously. Some millionaires’ names had been redacted – where their dates of birth or marriage were known – but cross-referencing with various data sources enabled the identification of 319 millionaires, equivalent to 72.8 percent of the number appearing on the millionaire list.

The tax year 1928 to 1929 is a very useful bench-mark for assessing the impact of the First World War and its aftermath on the composition of the super-rich. Prior to the 20th century, the highest echelons of wealth were dominated by the great landowners; reflecting a concentration of land-ownership unparalleled in Europe. William Rubinstein found that the wealth of the greatest landowners exceeded that of the richest businessmen until 1914, if not later. However, war-time inflation, higher taxes, and the post-war agricultural depression negatively impacted their fortunes. Meanwhile some industrialists benefitted enormously from the War.

By 1928 business fortunes had pushed even the wealthiest aristocrats, the Dukes of Bedford and Westminster, into seventh and eighth place on the list of top incomes. Their taxable incomes, £360,000 and £336,000 respectively, were dwarfed by those of the richest businessmen, such as the shipping magnate Sir John Ellerman (Britain’s richest man; the son of an immigrant corn broker who died in 1871, leaving £600) with a 1928 income of £1,553,000, or James Williamson, the first Baron Ashton, who  pioneered the mass production of linoleum – second on the list, with £760,000. Indeed, some 90 percent of named 1928/9 millionaires had fortunes based on (non-landed) business incomes. Moreover, the vast majority – 85.6 percent of non-landed males on the list – were active businesspeople, rather than rentiers.

 “Businesspeople millionaires” were highly clustered in certain sectors (relative to those sectors’ shares of all corporate profits): tobacco (5.40 times over-represented); shipbuilding (4.79); merchant and other banking (3.42); foods (3.20); ship-owning (3.02); other textiles (2.98); distilling (2.67), and brewing (2.59). These eight sectors collectively comprised 42.4 percent of all 1928/9 millionaires, but only 15.5 percent of aggregate profits. Meanwhile important sectors such as chemicals, cotton and woollen textiles, construction, and, particularly, distribution, are substantially under-represented.

The over-represented sectors were characterised by either rapid cartelisation and/or integration which, in most cases, had intensified during the War and its aftermath. Given that Britain had very limited tariffs, cartels and monopolies could only raise prices in sectors with other barriers to imports, principally “strategic assets”: assets that sustain competitive advantage through being valuable, rare, inimitable, and imperfectly substitutable. These included patents (rayon); control of distribution (brewing and tobacco); strong brands (whiskey; branded packaged foods); reputational assets (merchant banking); or membership of international cartels that granted territorial monopolies  (shipping; rayon). Conversely, there is very little evidence of “technical” barriers such as L-shaped cost curves that could have offset the welfare costs of industrial combination/concentration through scale economies. Instead, amalgamation or cartelisation were typically followed by rising real prices.

Another, less widespread but important tactic for gaining a personal and corporate competitive edge, was the use of sophisticated tax avoidance/evasion techniques to reduce tax liablity to a fraction of its headline rate. Tax avoidance was commonplace among Britain’s economic elite by the late 1920s, but a small proportion of business millionaires developed it to a level where most of their tax burden was removed, mainly via transmuting income into non-taxable capital gains and/or creating excessive depreciation tax allowances. Several leading British millionaires, including Ellerman, Lord Nuffield, Montague Burton, and the Vestey brothers (Union Cold Storage) were known to the Inland Revenue as skilled and successful tax avoiders.

These findings imply that the composition of economic elites should not simply be conflated with ‘wealth-creation’ prosperity (except for those elites), especially where their incomes include a substantial element of rent-seeking. Erecting or defending barriers to competition (through cartels, mergers, and strategic assets) may increase the number of very wealthy people, but  unlikely to have generated a positive influence on national economic growth and living standards — unless accompanied by rationalisation to substantially lower costs. In this respect typical inter-war business millionaires had strong commonalities with earlier, landed, British elites, in that they sustained their wealth through creating, and then perpetuating, scarcity in the markets for the goods and services they controlled.

To contact the author:

Spain’s tourism boom and the social mobility of migrant workers

By José Antonio García Barrero (University of Barcelona)

This blog is part of a series of New Researcher blogs.

Spain Balearic Islands Mediterranean Menorca. Available at Wikimedia Commons.

My research, which is based on a new database of the labour force in Spain’s tourism industry, analyses the assimilation of internal migrants in the Balearic Islands during the tourism boom between 1959 and 1973.

I show that tourism represented a context for upward social mobility for natives and migrants. But the extent of upward mobility was uneven among the different groups. While natives, foreigners and internal urban migrants achieved a significant level of upward mobility, the majority faced more difficulties to improve. The transferability of human capital to the services economy and the characteristics of their migratory fluxes determined the extent of the labour attainment of the migrants.

The tourism boom constituted one of the main scenarios of the path to modernisation in Spain in the twentieth century. Between 1959 and 1973, the country transformed into one of the top tourist economies of the world, mobilising a rapid and intense demographic and landscape transformation among coastal regions of the peninsula and the archipelagos.

The increasing demand for tourism services from West European societies triggered the massive arrival of tourists to the country. In 1959, four million tourists visited Spain; by 1973, the country hosted 31 million visitors. The epicentre of this phenomenon was the Balearic Islands.

In the Balearics, a profound transformation took place. In more than a decade, the capacity of the tourism industry skyrocketed from 215 to 1,534 hotels and pensions, and from 11,496 to 216,113 hotel beds. Between 1950 and 1981, the number of Spanish-born people from outside the Balearics increased from 33,000 inhabitants to 150,000, attracted by the high labour demand for tourism services. In 1950, they accounted for 9% of the total population; in 1981, that share had reached 34.4%.

In my research, I analyse whether the internal migrants who arrived at the archipelago – mostly seasonal migrants who ended up becoming permanent residents from stagnant rural agrarian areas in southern Spain – were able to take advantage of the rapid and profound transformation of the tourism industry. Instead of putting my focus on the process of movement from agrarian to services activities, my interest was in the potential possibilities of upward mobility in the host society.

I use a new database of the workforce, both men and women, in the tourism industry, comprising a total of 10,520 observations with a wide range of personal, professional and business data for each individual up to 1970. The features of this data make it possible to analyse the careers of these workers in the emerging service industry by cohort characteristics, including variables such as gender, place of birth, language skills or firm, among others. Using these variables, I examine the likelihood of belonging to four income categories.

My results suggest that the tourism explosion opened significant opportunities for upward labour mobility. Achieving high-income jobs was possible for workers involved in hospitality and tourism-related activities. But those who took advantage of this scenario were mainly male natives and urban migrants coming from northern Spain, mainly from Catalonia, and especially from European countries with clear advantages in terms of language skills.

For natives, human and social capital made the difference. For migrants, the importance of self-selection and the transferability of skills from urban cities to the new leisure economies were decisive.

Likewise, despite lagging behind, those from rural areas in southern Spain were able to achieve some degree of upward mobility, thus reducing progressively although not completely the gap with natives. Acquiring human capital through learning-by-doing and the formation of networks of support and information among migrants from the same areas increased the chances of improvement. Years of experience, knowing where to find job opportunities and holding personal contacts in the firms were important skills.

In that sense, the way that the migrants arrived at the archipelago mattered. Those more exposed to seasonal flows of migrants faced a lower capacity for upward mobility since they were recruited in their place of origin rather than through migrant networks or returned to their homes at the end of each season.

In comparison, those who relied on migratory networks and remained as residents in the archipelago had a greater chance of getting better jobs and reducing their socio-economic distance from the natives.

Baumol, Engel, and Beyond: Accounting for a century of structural transformation in Japan, 1885-1985

by Kyoji Fukao (Hitotsubashi University) and Saumik Paul (Newcastle University and IZA)

The full article from this blog post was published on The Economic History Review, and it is now available on Early View at this link

Bank of Japan, silver convertible yen. Available on Wiki Commons

Over the past two centuries, many industrialized countries have experienced dramatic changes in the sectoral composition of output and employment. The pattern of structural transformation, depicted for most of the developed countries, entails a steady fall in the primary sector, a steady increase in the tertiary sector, and a hump shape in the secondary sector. In the literature, the process of structural transformation is explained through two broad channels: the income effect, driven by the generalization of Engel’s law, and the substitution effect, following the differences in the rate of productivity across sectors, also known as “Baumol’s cost disease effect”.

At the same time, an input-output (I-O) model provides a comprehensive way to study the process of structural transformation. The input-output analysis accounts for intermediate input production by a sector, as many sectors predominantly produce intermediate inputs, and their outputs rarely enter directly into consumer preferences. Moreover, an input-output analysis relies on observed data and a national income identity to handle imports and exports. The input-output analysis has considerable advantages in the context of Japanese structural transformation first from agriculture to manufactured final consumption goods, and then to services, alongside transformations in Japanese exports and imports that have radically changed over time.

We examine the drivers of the long-run structural transformation in Japan over a period of 100 years, from 1885 to 1985. During this period, the value-added share of the primary sector dropped from 60 per cent  to less than 1 per cent, whereas that of the tertiary sector rose from 27 to nearly 60 per cent in Japan (Figure 1). We apply the Chenery, Shishido, and Watanabe framework to examine changes in the composition of sectoral output shares. Chenery, Shishido, and Watanabe used an inter-industry model to explain deviations from proportional growth in output in each sector and decomposed the deviation in sectoral output into two factors: the demand side effect, a combination of the Engel and Baumol effects (discussed above), and  the supply side effect, a change in the technique of production. However, the current input-output framework is unable to uniquely separate the demand side effect into forces labelled under the Engel and Baumol effects.

Figure 1. Structural transformation in Japan, 1874-2008. Source: Fukao and Paul (2017). 
Note: Sectoral shares in GDP are calculated using real GDP in constant 1934-36 prices for 1874-1940 and constant 2000 prices for 1955-2008. In the current study, the pre-WWII era is from 1885 to1935, and the post-WWII era is from 1955 to 1985. 

To conduct the decomposition analysis, we use seven I-O tables (every 10 years) in the prewar era from 1885 to 1935 and six I-O tables (every 5 years) in the postwar era from 1955 to 1985. These seven sectors include: agriculture, forestry, and fishery; commerce and services; construction;  food;  mining and manufacturing (excluding food and textiles); textiles, and  transport, communication, and utilities.

The results show that the annual growth rate of GDP more than doubled in the post-WWII era compared to the pre-WWII era. The real output growth was the highest in the commerce and services sector throughout the period under study, but there was also rapid growth of output in mining and manufacturing, especially in the second half of the 20th century. Sectoral output growth in mining and manufacturing (textile, food, and the other manufacturing), commerce and services, and transport, communications, and utilities outgrew the pace of growth in GDP in most of the periods. Detailed decomposition results show that in most of the sectors (agriculture, commerce and services, food, textiles, and transport, communication, and utilities), changes in private consumption were the dominant force behind the demand-side explanations. The demand-side effect was strongest in the commerce and services sector.

Overall, demand-side factors — a combination of the Baumol and Engel effects, were the main explanatory factors in the pre-WWII period, whereas  supply-side factors were the key driver of structural transformation in the post-WWII period.

To contact the authors:

Kyoji Fukao,

Saumik Paul,, @saumik78267353


Baumol, William J., “Macroeconomics of unbalanced growth: the anatomy of urban crisis”. American Economic Review 57, (1967) 415–426.

Chenery, Hollis B., Shuntaro Shishido and Tsunehiko Watanabe. “The pattern of Japanese growth, 1914−1954”, Econometrica30 (1962), 1, 98−139.

Fukao, Kyoji and Saumik Paul “The Role of Structural Transformation in Regional Convergence in Japan: 1874-2008.” Institute of Economic Research Discussion Paper No. 665. Tokyo: Institute of Economic Research (2017).

Growth Before Birth: The Relationship between Placental Weights and Infant and Maternal Health in early-twentieth century Barcelona

By Gregori Galofré-Vilà (Universitat Pompeu Fabra and Barcelona Graduate School of Economics) and Bernard Harris (University of Strathclyde)

R. Alcaraz, Maternitat, Ayuda al desvalido. Available at Wikicommons.

It is now widely accepted that early-life conditions have a significant effect on lifelong health (see e.g. Wells 2016).  Many researchers have sought to examine intrauterine health by studying birth weights, but the evidence of historical changes is mixed.  Although some researchers have argued that birth weights have increased over time (e.g. O’Brien et al. 2020), others have found little evidence of any significant change over the course of the last century (Roberts and Wood 2014).  These findings have led Schneider (2017: 25) to conclude either that, ‘fetal health has remained stagnant’ or that ‘the indicators used to measure fetal health … are not as helpful as research might hope’.

The absence of unequivocal evidence of changes in birth weight has encouraged researchers to pay more attention to other intrauterine health indicators, including the size and shape of the placenta and the ratio of placental weight to birth weight (e.g. Burton et al. 2010).  The placenta transfers oxygen and nutrients from the mother to foetus and provides the means of removing waste products.  Although the evidence regarding changes in placental weight is also mixed, it has been described as a ‘mirror’ reflecting the foetus’ intrauterine status (Kaur 2016: 185).

Historical studies of changes in placental weights are still very rare.  However, we have collected data on almost 4000 placentas which were weighed and measured at Barcelona’s Provincial House (La Casa Provincial de Maternitat i Expósits) between 1905 and 1920.  Our new paper (Galofré-Vilà and Harris, in press) examines the impact of short-term fluctuations in economic conditions on placental weights immediately before and during the First World War, together with the relationship between placental weights and other maternal and neonatal health indicators and long-term changes in placental weight over the course of the century.

Our first aim was to compare changes in birth weight with changes in placental weight.  As we can see from Figure 1, there was little change in average birth weights, but placental weights fluctuated more markedly.  In our paper, we show how these fluctuations may have been related to changes in real wage rates over the same period.

Figure 1. The development of birthweight and placental weight, 1905-1920. Source: as per article. Note: The dark blue line shows the monthly data and the red lines show the yearly averages with their associated 95 percent confidence intervals.

These findings support claims that the placenta is able to ‘adapt’ to changing economic circumstances, but our evidence also shows that such ‘adaptations’ may not be able to counteract the impact of maternal undernutrition entirely.  As Figure 2 demonstrates, although most neonatal markers show a reverse J-shaped curve (a higher risk of perinatal mortality with premature or small-for-gestational-age births), the relationship between placental weight and early-life mortality is U-shaped.

We also control for maternal characteristics using a Cox proportional hazards model.  Even if increases in placental weight can be regarded as a form of ‘adaptive response’, they are not cost-free, as both very low and very high placental weights are associated with increased risks of early-life mortality.  These findings are consistent with David Barker’s conclusion that elevated placental weight ratios lead to adverse outcomes in later life (Barker et al. 2010).

Figure 2. Early-life Mortality, Birthweight, Birth Length, Placental weight and BW:PW ratio. Source: as per article.

We have also compared the average value of placental weights in the Provincial House with modern Spanish data.  These data suggest that average placental weights have declined over the course of the last century.  However, the data from other countries are more mixed.  Placental weight also seems to have declined in Finland and Switzerland, but this is less obvious in other countries such as the United Kingdom and the United States.

Overall, whilst placental weights may well provide a sensitive guide to the intrauterine environment, we still know relatively little about the ways in which they may, or may not, have changed over time.  However, this picture may change if more historical series come to light.

To contact the authors: 

Gregori Galofré-Vilà,, Twitter: @gregorigalofre

Bernard Harris,


Barker, D. J. P., Thornburg, K. L., Osmond, C., Kajantie, E., and Eriksson, J. G. (2010), ‘The Surface Area of the Placenta and Hypertension in the Offspring in Later Life’, International Journal of Developmental Biology, 54, 525-530.

Burton, G., Jauniaux, E. and and Charnock-Jones, D.S. (2010), ‘The influence of the intrauterine environment on human placental development’, International Journal of Developmental Biology, 54, 303-11.

Galofré-Vilà, G. and Harris, B. (in press), ‘Growth Before birth: the relationship between placental weights and infant and maternal health in early-twentieth century Barcelona’, Economic History Review.

Kaur, D. (2016), ‘Assessment of placental weight, newborn birth weight in normal pregnant women and anaemic pregnant women: a correlation and comparative study’, International Journal of Health Sciences and Research, 6, 180-7.

O’Brien, O., Higgins, M. and Mooney, E. (2020), ‘Placental weights from normal deliveries in Ireland’, Irish Journal of Medical Science, 189, 581-3.

Roberts, E., and Wood, P. (2014), ‘Birth weight and adult health in historical perspective: Evidence from a New Zealand Cohort, 1907-1922’, Social Science and Medicine, 107, 154-161.

Schneider, E. (2017), ‘Fetal health stagnation: have health conditions in utero improved in the US and Western and Northern Europe over the past 150 years?’, Social Science and Medicine, 179, 18-26.

Wells, J.C.K. (2016), The metabolic ghetto: evolutionary perspectives on nutrition, power relations and chronic disease, Cambridge: Cambridge University Press.

COVID-19 and the food supply chain: Impacts on stock price returns and financial performance

This blog is  part of the Economic History Society’s blog series: ‘The Long View on Epidemics, Disease and Public Health: Research from Economic History’.

By Julia Höhler (Wageningen University)

As growing evidence about COVID-19 and its effects on the human body and transmission mechanisms emerges, economists are now making progress in understanding the impact of the global pandemic on the food supply chain. While it is apparent that many companies were affected, the nature and magnitude of the effects continue to require investigation.  A special issue of the Canadian Journal of Agricultural Economics on ‘COVID-19 and the Canadian agriculture and food sectors’, was among the first publications to examine the  possible effects of COVID-19 on food-supply.  In our ongoing work we take the next step and ask the question: How can we quantify the effects of COVID-19 on companies in the food supply chain?

Figure 1. Stylized image of supermarket shopping Source: Oleg Magni, Pexels

Stock prices as a proxy for the impact of COVID-19

One way to quantify the initial effects of COVID-19 on companies in the food supply chain is to analyse stock prices and their reaction over time. The theory of efficient markets states that stock prices reflect investors’ expectations regarding future dividends. If stock prices fluctuate strongly, this is a sign of lower expected returns and higher risks. Volatile stock markets can increase businesses’ financing costs and, in the worst case, threaten their liquidity. At the macroeconomic level, stock prices can also be useful to indicate the likelihood of a future recession. For our analysis of stock price reactions, we have combined data from different countries and regions. In total, stock prices for 71 large stock-listed companies from the US, Japan and European were collected. The companies’ activities in our sample cover the entire supply chain from farm equipment and supplies, agriculture, trade, food-processing, distribution, and retailing.

Impact on stock price returns comparable to the 2008 financial crisis

 We began by  calculating the logarithmic daily returns for the companies’ stocks and their average. Second, we compared these average returns with the performance of the S&P 500.  Figure 2, below,  shows the development of average daily returns from 2005 to 2020. Companies in the S&P 500 (top) achieved higher returns on average, but also exhibited higher fluctuations than the average of the companies we examined (bottom). Stock price returns fluctuated particularly strongly during the 2008 financial crisis. The fluctuations since the first notification of COVID-19 to the WHO in early January to the end of April 2020 (red area) are comparable in their magnitude. The negative fluctuations in this period are somewhat larger than in 2008. Based on the comparison of both charts, it can be assumed that stock price returns of large companies in the food supply chain were on average less affected by the two crises. Nevertheless, a look at the long-term consequences of the 2008 financial crisis suggests that a wave of bankruptcies, lower financial performance and a loss of food security may still follow.

Figure 2. Average daily returns, for the S & P 500 (top panel) and 71 food-supply companies (FSC), lower panel, 2005-2020. Source: Data derived from multiple sources. For further information, please contact the author.

Winners and losers in the sub-sectors

In order to obtain a more granular picture of the impact of COVID-19, the companies in our sample  were divided into sub-sectors, and their stock price volatility was calculated between January and April, 2020. Whereas food retailers and breweries experienced relatively low volatility in stock prices, food distributors and manufacturers of fertilizers and chemicals experienced relatively higher volatilities. In order to cross-validate these results, we collected information on realized profits or losses from the companies’ financial reports. The trends observed in  stock prices are also reflected in company results for the first quarter of 2020. Food retailers were able to increase their profits in times of crisis, while food distributors recorded high losses compared to the previous period. The results are likely related to the lockdowns and social distancing measures which altered food distribution channels.

Longer-term effects

Just as the vaccine for COVID-19 is still in the pipeline, research into the effects of COVID-19 needs time to show what makes companies resilient to the effects of unpredictable shocks of this magnitude. Possible research topics relate to the question of whether local value chains are better suited to cushion the effects of a pandemic and maintain food security. Further work is also needed to understand fully the associated trade-offs between food security, profitability, and climate change objectives. Another research question relates to the effects of government protective measures and company support programmes.  Cross-country studies can provide important insights here. Our project lays the groundwork for future research into the effects of shocks on companies in the food value chain. By combining different data sources, we were able to compare stock returns in times of COVID-19 with those of the 2008 crisis, and  identify differences between sub-sectors. In the next step we will use company characteristics such as profitability to explain differences in returns.

To contact the author: julia.hoehler[at]

The Paradox of Redistribution in time: Social spending in 54 countries, 1967-2018

By Xabier García Fuente (Universitat de Barcelona)

This research is due to be presented in the sixth New Researcher Online Session: ‘Spending & Networks’.

Money of various currencies. Available at Wikimedia Commons.

Why are some countries more redistributive than others? This question is central to current welfare state politics, especially in view of rising levels of inequality and the ensuing social tensions. Since coming to power in 2019, Brazil’s far-right government has restricted access to Bolsa Familia—a conditional cash-transfer program—despite its success at reducing poverty with a very low cost (less than 0.5% of national GDP). In richer countries, the social-democratic project is said to be obsolete, as left-wing parties forsake egalitarian policies to cater to economic winners (Piketty, 2020).

How can we make sense of this sort of distributive conflict? Are there common patterns in rich and middle-income countries? My research suggests that welfare state institutions show great inertia, so we need to observe the origins of social policies to explain current redistributive outcomes. Initial policy positions —how pro-poor or pro-rich social transfers were— determine what groups emerge as net winners or net losers when social expenditure increases, which crucially affects the viability and direction of policy change.

Korpi and Palme (1998) famously suggested the existence of a Paradox of Redistribution: ‘the more we target benefits at the poor … the less likely we are to reduce poverty and inequality’. In their framework, progressive programs may be more redistributive per euro spent, but they generate zero-sum conflicts between the poor and the middle-class and obstruct the formation of redistributive political coalitions. In contrast, universal programs align the preferences of the poor and the middle-class and lead to bigger, more egalitarian welfare states. In sum, redistribution increases as transfers become bigger and less pro-poor.

Using survey micro-data provided by the Luxembourg Income Study (LIS), my research updates Korpi and Palme’s (1998) study and addresses two gaps. First, I extend the sample to 54 rich and middle-income countries, including elitist welfare states in Latin America and other middle-income countries. As Figure 1 shows, extending the sample would clearly refute the Paradox: redistribution is higher in more pro-poor countries.

Second, in line with the dynamic political arguments suggested in the Paradox, I explore the evolution of social transfers and redistribution within countries over time. Overall, countries have increased redistribution by making their transfers less pro-poor, which matches the predictions of the Paradox (see Figure 2). The relationship is especially strong in Ireland, Canada, United Kingdom and Norway. Parting from highly progressive (pro-poor) policy positions, these countries have improved redistribution increasing expenditure and reducing their bias towards the poor.

Latin American countries are a notorious exception to this pattern. They are markedly pro-rich and, contrary to the cases above, they have improved redistribution very modestly by becoming more pro-poor (see Figure 3).

What does it mean that redistribution increases as transfers become more or less pro-poor? United Kingdom and Mexico provide a good example (see Figure 4). In the United Kingdom, redistribution through social transfers increased from 7 Gini points in 1974 to 19 Gini points in 2016. In the same period, the share of total social transfers received by the poorest 20% of the population decreased from 35% to 18%. In Mexico, the share of total social transfers obtained by the poorest 20% went from 2% in 1984 to 10% in 2016, while the share obtained by the richest 20% decreased from 66% to 51%. Yet, despite these advances, redistribution through social transfers in Mexico remains very low (2.5 Gini points in 2016, from 0.1 Gini points in 1984).


In countries with pro-poor social transfers, extending coverage involves reaching up the income ladder to include richer constituencies, which narrows the gap between net winners and net losers. This reduces the salience of distributive conflicts and eases welfare state expansion, leading to higher redistribution. However, as transfers become more pro-rich the margin to leverage the progressivity-size trade-off narrows, which helps explain the inability of current welfare states to increase redistribution as inequality rises.

In countries with pro-rich social transfers, extending coverage involves reaching down the income ladder to include the poor. Launching programs for the poor requires rising taxes or cutting the benefits of privileged insiders, which creates a clearly delineated gap between net winners and net losers. This increases the salience of distributive conflicts, leading to smaller, less egalitarian welfare states.

In sum, social policy design is very persistent because it crucially shapes distributive conflicts. Advanced welfare states have increased redistribution by getting bigger and less progressive (less pro-poor). This fits with historical evidence that advanced welfare states grew from minimalist cores, but it also describes contemporary policy change. Following this same reasoning, elitist welfare states in developing regions will find it difficult to become more egalitarian. Figure 5 shows the persistency of distributive outcomes across welfare regimes.


Korpi, W. and Palme, J. (1998). The paradox of redistribution and strategies of equality: Welfare state institutions, inequality, and poverty in the western countries. American Sociological Review, 63(5):661–687.

Piketty, T. (2020). Capital and Ideology. Harvard University Press.

Xabier García Fuente

Twitter: @xabigarf

Coordinating Decline: Governmental Regulation of Disappearing Horse Markets in Britain, 1873-1957 (NR Online Session 5)

By Luise Elsaesser (European University Institute)

This research is due to be presented in the fifth New Researcher Online Session: ‘Government & Colonization’.


Milkman and horse-drawn cart – Alfred Denny, Victoria Dairy, Kew Gardens, Est 1900. Available at Wikimedia Commons.

The enormous horse drawn society of 1900 was new. An unprecedented amount of goods and people could only be moved by trains and ships between terminal points and therefore, horses were required by anybody and for everything to reach its final destination. But, the moment the need for horsepower peaked, new technologies had already started to make the working horse redundant for everyday economic life. The disappearance of the horse was a rapid process in the urban areas, whereas the horse remained an economic necessity much longer in other areas of use such as agriculture. The horses decline left behind deep traces causing fundamental changes in soundscapes, landscapes, and smells of human environment and economic life.


Against prevailing narratives of a laissez-faire approach, the British government monitored and shaped this major shift in the use of energy source actively. The exploration of the political economy of a disappearing commercial good examines the regulatory practices and ways the British government interacted with producers and consumers of markets. This demonstrates that governmental regulations are inseparable from modern British economy and that government intervention follows the careful assessment of costs and benefits as well as self-interest over the long time period.

Public pressure groups such as the RSPCA as well as social and business elites were often strongly connected to government circles embracing the opportunity to influence policy outcomes. For instance, the Royal Commission on Horse Breeding was formed in December 1887 is telling because it shows where policy making power that passed through Westminster originated. The commissionaires were without exception holders of heredity titles, members of the gentry, politicians, or businessmen, and all were avid horsemen and breeders. To name but two, Henry Chaplin, the President of the Board of Agriculture, had a family background of Tory country gentlemen and was a dedicated rider, and Mr. John Gilmour, whose merchant father grew rich in the Empire, owned a Clydesdale stud of national reputation. Their self-interest and devotion to horse breeding seems obvious, especially in the context of the agricultural depression when livestock proved more profitable than the cultivation of grain.

Although economic agents of the horse markets were often moving within government circles, they had to face regulations. For example, a legal framework was developed which fashioned the scope of manoeuvre for import and export markets for horses. The most prominent case during the transition from horse to motor-power was the emergence of an export market of horses for slaughter. British charitable organisations such as the RSPCA, the Women’s Guild for Empire, and the National Federation of Women’s Institute pressured the government to prevent the export of horses for slaughter on grounds of “national honour” since the 1930s. However, though the government never publicly admitted it, the meat market was endorsed to manage the declining utility of horsepower. With technologies becoming cheaper, horsemeat markets were greeted by large businesses such as railway companies as way to dispose of their working horses without making a financial loss. Hence, the markets for working horses were not merely associated with the economic use and demand for their muscle power but were linked to government regulation.

Ultimately, an analysis of governmental coordination can be linked to wider socio-cultural and economic systems of consumption because policy outcome indeed influenced the use of the horse but likewise coordination was monitored by the agents of the working horse markets.

Luise Elsaesser

Twitter: @Luise_Elsaesser

Women in the German Economy: A Long Way to Gender Equality (NR Session 4)

By Theresa Neef (Freie Universität Berlin)

This research is due to be presented in the fourth New Researcher Online Session: ‘Equality & Wages’.


Scanned image of a mid-1930s postcard depicting Unter den Linden in Berlin. Available at Wikimedia Commons.

Female employees in the European Union (EU-27) earn, on average, about 85 per cent of the wages received by male employees. While some countries such as France and Sweden exhibit closer pay equality, women in Germany face a larger gap and receive just 79 per cent of the average male wage, according to the 2018 results from Eurostat 2020. How did this state of affairs emerge?

To understand contemporary pay inequality, it is vital to take a long-run perspective and look at the development of the gender pay ratio in Germany since 1913.  An in-depth analysis of historical inquiry reports and publications by the statistical offices reveals that in 1913 women in Germany earned around 44 per cent of male wages. Although  World War I led to a temporary increase in women’s pay in blue-collar occupations, this trend was soon reversed and the gender-segregated labour market was re-established following demobilization.

The interwar period brought about the most dynamic leap in gender relations during the 20th century. While in 1920 German women earned on average 45% of a man’s average pay, by 1937 this share had increased to 61%, a consequence of women’s occupational transition and the more progressive institutional framework adopted during the Weimar Republic.

With the growing number of white-collar jobs, young females had job opportunities that were better paid and more socially accepted than the work in low-paid domestic services or agriculture. That was an opportunity they took: from 1910 to 1960, women increased their share in those fast-growing occupations from 18% to 45%, while their share decreased in agricultural work. This trend most likely contributed to women’s wage gains relative to men.

During the Weimar Republic, a new constitution and a more progressive institutional framework fostered further equalization of earnings, especially in the white-collar occupations. In 1919, the Weimar constitution introduced compulsory schooling for all youths under 18 years irrespective of gender. For the first time, this law provided girls with the same chances to receive vocational education and an apprenticeship as their male peers. All youths that worked in commercial and industrial firms were obliged to attend vocational commercial school at least once a week for two to three years.  Before the introduction of this law, employers hardly invested in girls’ apprenticeships because women were seen as transient employees leaving the labour force upon marriage. This non-gendered schooling obligation led to a dynamic convergence of vocational training between boys and girls.

In the post-1945 period, the gender pay gap decreased in Germany from 65 percent in 1960 to 74 per cent  twenty years later. In contrast,  Sweden took the lead among European countries and by 1980, the gender pay gap was just 14 percentage points. However, since the 1980s, the gender pay gap has stagnated in many European countries.


Figure 1: Gender pay ratio, Germany, Sweden, and the USA. Swedish and German series based on mean earnings; US-American time series based on median earnings if not indicated differently. The German time series covers the German Reich, the Federal Republic of Germany and reunified Germany (hollow items).


All in all, the long-run perspective shows that since the beginning of the 20th century Germany has persistently exhibited a lower gender pay equality than other European economies, such as Sweden, despite the important improvement observed in the interwar period. In the postwar period, the gap between Germany and Sweden widened further due to slower progress in the young Federal Republic. These results suggest that differences in gender pay inequality across countries can be traced back to historical roots that go beyond the developments in the past forty years.

The Growth Pattern of British Children, 1850-1975

By Pei Gao (NYU Shanghai) & Eric B. Schneider (LSE)

The full article from this blog is forthcoming in the Economic History Review and is currently available on Early View.


HMS Indefatigable with HMS Diadem (1898) in the Gulf of St. Lawrence 1901. Available at Wikimedia Commons.

Since the mid-nineteenth century, the average height of adult British men increased by 11 centimetres. This increase in final height reflects improvements in living standards and health, and provides insights on the growth pattern of children which has been comparatively neglected. Child growth is very sensitive to economic and social conditions: children with limited nutrition or who suffer from chronic disease, grow more slowly than healthy children. Thus, to achieve such a large increase in adult height, health conditions must have improved dramatically for children since the mid-nineteenth century.

Our paper seeks to understand how child growth changed over time as adult height was increasing. Child growth follows a typical pattern shown in Figure 1.  The graph on the left shows the height by age curve for modern healthy children, and the graph on the right shows the change in height at each age (height velocity). We look at three dimensions of the growth pattern of children: the final adult height that children achieve, i.e. what historians have predominantly focused on to date; the timing (age) when the growth velocity peaks during puberty,  and, finally,   the overall speed of maturation which affects the velocity of growth across all ages and the length of the growing years.


Figure 1.         Weights and Heights for boys who trained on HMS Indefatigable, 1860s-1990s.

Source: as per article


To understand how growth changed over time, we collected information about 11,548 boys who were admitted to the training ship Indefatigable from the 1860s to 1990s (Figure 2).  This ship was located on the River Mersey near Liverpool for much of its history and it trained boys for careers in the merchant marine and navy. Crucially, the administrators recorded the boys’ heights and weights at admission and discharge, allowing us to calculate growth velocities for each individual.


Figure 2.         HMS Indefatigable

Source: By permission, the Indefatigable Old Boys Society


We trace the boys’ heights over time (grouping them by birth decade) and find that they grew most rapidly during the interwar period. In addition, the most novel finding was that for boys born in the nineteenth century there is little evidence that they experienced a strong pubertal growth spurt unlike healthy boys today. Their growth velocity was relatively flat across puberty.  However, starting with the 1910 birth decade, boys began experiencing more rapid pubertal growth similar to the right-hand graph in Figure 1. The appearance of rapid pubertal growth is a product of two factors: an increase in the speed of maturation, which meant that boys grew more rapidly during puberty than before and, secondly,  a decrease in the variation in the timing of the pubertal growth spurt, which meant that boys were experiencing their pubertal growth at more similar ages.


Figure 3.         Adjusted height-velocity for boys who trained on HMS Indefatigable.

Source: as per article


This sudden change in the growth pattern of children is a new finding that is not predicted by the historical or medical literature.  In the paper, we show that this change cannot be explained by improvements in living standards on the ship and that it is robust to a number of potential alternative explanations.   We argue that reductions in disease exposure and illness were likely the biggest contributing factor. Infant mortality rates, an indicator of chronic illness in childhood, declined only after 1900 in England and Wales, so a decline in illness in childhood could have mattered. In addition, although general levels of nutrition were more than adequate by the turn of the twentieth century, the introduction of free school meals and the milk-in-schools programme in the early twentieth century,  likely also helped ensure that children had access to key protein and nutrients necessary for growth.

Our findings matter for two reasons. First, they help complete the fragmented picture in the existing historical literature on how children’s growth changed over time. Second, they highlight the importance of the 1910s and the interwar period as a turning point in child growth. Existing research on adult heights has already shown that the interwar period was a period of rapid growth for children, but our results further explain how and why child growth accelerated in that period.


Pei Gao


Eric B. Schneider

Twitter: @ericbschneider