On archives, macroeconomics and labour markets

Everything (well,… most things) you know about wages 1650 -1800 is wrong. That’s a great opportunity for historians

by Judy Stephenson (University of Oxford)

 

My forthcoming paper in the Economic History Review (abstract available here) makes some big claims about the level of nominal and real wages in urban England before industrialization. There is an early working paper version here

Specifically, I argue that the data used for the years between 1650 and 1800 are completely wrong because the people who compiled them (who go back in some cases to the 1930s and late nineteenth century) took figures from bills for construction services rather than actual wage books. As an actual wage book from the contractor who built the South West Tower of St Paul’s shows, men were not paid these charge out rates, they were paid considerably less.

This has some big ramifications for some influential economists and historians who have relied on long established data sets of ‘builders wages’, such as those of Phelps Brown and Hopkins (1955, 1956) to create macroeconomic models of the past to calculate real wages and infer GDP; to argue that Britain had ‘high wages’; or a comparative advantage in traded goods; or a narrower ‘skill premium’ and better institutions.

In truth, that these wages were ‘wrong’ is in no way surprising to anyone who has ever done work on early modern earning. Any historian of the eighteenth century sensed that these ‘average wages’ were unreasonably high and that their implied welfare ratios gave a falsely rosy picture. (As someone face palmed; ‘A labourer in London able to afford a respectable basket of goods for a family in the mid eighteenth century?? Have you read Dorothy George?’). Those who have ever worked with labour records and account books know that the homogenous figures found by Elizabeth Gilboy were questionable, and indeed in 2011, John Hatcher had successfully called into question the golden age of the fifteenth century. ‘Real’ day wages and wage accounts are always fascinatingly messy, unpredictable, and varied, yet econometricians clung to the old data sets because they believed it was too difficult to find anything else.

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Chart showing comparative real wages, in grams of silver, of European cities 1650 -1800, based on Allen, (2001), where the nominal wage has been reduced by 25%.

My findings make the idea that Britain was a ‘high wage’ economy in the long eighteenth century hard to sustain. If paid wages were 25% lower than we thought, the real wage for labourers through this period in London was not the highest by far. Rather, it seems, they were at the lower end of NW European advanced economies.

This is exciting for economists who think that explaining why the industrial revolution happened in Britain is the ‘Holy Grail’ (it’s back up for grabs). But, the debunking of these inaccurate wage series also makes it a really exciting time for people who want to understand the role of labour in the economy, and who think that the period before collective bargaining and factories has some strong parallels with our own. Lots has been written about the decline of ‘history’ in economic history, but the new opportunity is as wide and bright for historians as it is for economists and econometricians. This breakthrough in this long-run view on wages came not from new statistical techniques, but from the margins of dusty parchment, little iron pins, raggy old papers, smudged watered down ink, and the tentative ‘x’s’ and proud flourishes of the archives.

It’s time to stop recycling tired old data sets and expecting new technology to tell us something different about them. There is a wealth of sources and data in London archives, which have never been used before because they didn’t look comparable to Elizabeth Gilboy’s ‘day rates’, but which offer historians and economists the potential to look at earning, bargaining and the capital labour relationship in new ways. There is exciting work in progress from established and new scholars in the field. No one data set will ever be able to replace the supposed reliability of Phelps Brown and Hopkins, but even they were very tentative about their sources.

To contact the author: judy.stephenson@wadham.ox.ac.uk

References list available here

Slavery in medieval England: broad continuation between the 12th and 17th centuries

by Judith Spicksley (University of York)

Slavery in England had apparently been replaced by serfdom in the twelfth century, yet writers in the sixteenth and seventeenth centuries continue to use terms such as ‘slave’, ‘serf’, and ‘villein’ interchangeably. This research seeks to make sense of this historical conundrum.

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Reeve and serfs in feudal England, c. 1310. From Wikimedia Commons <http://www.wikiwand.com/en/Serfdom&gt;

Historians of medieval England have suggested that slavery had disappeared by the twelfth century. Explanations include the growth of a new notion of chivalric behaviour, and the liberalising effects of an expanding Christianity, in which enslavement of fellow Christians became unthinkable.

But most emphasis has been placed on the effects of economic development, through a combination of technological change, demographic expansion, market growth and a shift in the nature of agricultural production.

In the view of many commentators, serfdom – the system of unfree labour associated with the manorial system – replaced slavery as the main method of restricting the freedom of the individual. Slaves were of unfree status, but serfs, who were given access to land in return for providing a varied mix of labour, goods and cash – were of unfree tenure.

The term ‘serfdom’ has wide application across a range of European manorial systems, but in England, it is usually referred to as ‘villeinage’, since this was the name of the common law institution that developed in the twelfth century.

While there has been considerable debate about the causes of slavery’s decline, there has been much less disagreement about its timing. More recent research has suggested that domestic slaves – mostly women – were retained and underwent something of a revival in southern Mediterranean towns in the later medieval period. There are also examples of young women who were kidnapped and sold as prostitutes in England.

This research suggests that for a number of reasons, we have missed the broader continuation of slavery between the twelfth and seventeenth centuries. In part this is because it did decline, but it also became less visible.

On the one hand, the economic roles undertaken by slaves were no different from those done by individuals who were free. On the other hand, the institution of villeinage used a new language to define itself: the unfree were villeins, bondmen and nativi, and were not identified as ‘slaves’.

It is also clear that there was an overlap between unfree status and unfree tenure that has not yet been adequately investigated. Later histories have been heavily influenced both by the transatlantic slave trade, which provided an unforgettable image of the ‘slave’, and by the emergence of two major theoretical approaches: classical economic theory; and the Marxian materialist dialectic.

Together these factors have been instrumental in bringing about a reluctance to translate the Latin word servus as ‘slave’ in the legal texts, literature and documentary evidence of late medieval England, and give preference instead to the language of villeinage.

Slavery may have changed its appearance in the late medieval period, but in law, little had changed. Those of unfree status still owned nothing, could devise nothing and were at the will of their lords; moreover, their children inherited their unfree status.

British engineering skills in the age of steam

by Harry Kitsikopoulos (academic director, Unbound Prometheus)

Side-lever_engine_1849
Wiki Commons. The side-lever Engine, 1849 ca.

 

Engineering skills in Britain improved during the eighteenth century but progress was not linear. My research uses a novel approach to quantifying the trends from the first appearance of the technology of steam power (1706) through to the last quarter of the century (the Watt era), using a large amount of data on fuel consumption rates.

Britain was a very unlikely candidate for the invention of steam engines, as I argue in my 2016 book, Innovation and Technological Diffusion: An Economic History of the Early Steam Engines. It was French and Italians who first rediscovered, translated and published the ancient texts of Hero of Alexandria on steam power; they also discovered the existence of vacuum in nature, the main principle of a steam engine’s working mechanism.

But Britain had two advantages: first, a divorce-obsessed king who detached the island from the Catholic dogma and its alliance with the Cartesian epistemological paradigm, both denying the existence of vacuum in nature. The same king also brought a seismic institutional transformation by passing monastic properties under the ownership of lay landlords, a class far more keen on solving the water drainage problem plaguing the mining industry in its drive to exploit mineral wealth.

Britain was also fortunate in another respect: it was relatively backward in terms of mining technology! That proved to be a good thing. While mining districts in Germany and Liège used a technology that resolved the drainage problem, Britain failed to imitate them, hence forcing itself to seek alternative solutions, thereby leading to the invention of the steam engine.

Grand inventions earn glorious references in school textbooks, but it is the diffusion of a technology that contributes to economic growth, a process that relies on the development of relevant human capital.

The records reveal that there were not much more than a dozen engineers who were active in erecting engines during the period 1706-75, including Thomas Newcomen, the obscure ironmonger from Devon who came up with the first working model. The figure increased to at least 60 during the last quarter of the century through the action of the invisible hand: the initial scarcity of such skills raised wages, which, in turn, acted as stimuli transferring talent from related engineering occupations.

My new study traces the production and marketing strategies of this group, which ranged from the narrow horizons of certain figures concentrating on the erection of engines in one locality, a single model, or focusing on one industry all the way to the global outlook of the Boulton and Watt firm.

The last question I pose is perhaps the most interesting: did British engineers get better during the eighteenth century in managing these engines?

Measuring skill is not a straightforward affair. Two well-respected experts at the time came up with tables that specified what the ideal fuel rates ought to have been for engines of different hp. When plotted in a graph these two variables depict a curve of ideal rates.

My analysis uses two distinct datasets with 111 fuel rate observations recorded in working engines – one for the older Newcomen model and another for the newer Watt engines. These actual fuel rates were plotted as bullet points around the respective ‘ideal’ curves. A progressively narrower distance between the curves and the bullet points would indicate higher efficiency and improved engineering skills.

The results reveal that for the first 25 years following the appearance of both models, there was no consistent trend: the bullet points alternated coming closer and moving away from the ideal curves. But the data also reveal that these initial patterns gave way to trends revealing consistent progress.

In an era of practical tinkerers lacking a formal educational system when it comes to this particular skill, British engineers did get better through a classic process of ‘learning-by-doing’, But this only happened after an initial stage of adjustment, of getting used to models with different working mechanisms.

Safe-haven asset: property speculation in medieval England

by Adrian Bell, Chris Brooks and Helen Killick (ICMA Centre, University of Reading)

Neuadd_y_Penrhyn

While we might imagine the medieval English property market to have been predominantly ‘feudal’ in nature and therefore relatively static, this research reveals that in the fourteenth and fifteenth centuries, it demonstrated increasing signs of commercialisation.

The study, funded by the Leverhulme Trust, finds that a series of demographic crises in the fourteenth century caused an increase in market activity, as opportunities for property ownership were opened up to new sections of society.

Chief among these was the Black Death of 1348-50, which wiped out over a third of the population. In contrast with previous research, this research shows that after a brief downturn in the immediate aftermath of the plague, the English market in freehold property experienced a surge in activity; between 1353 and 1370, the number of transactions per year almost doubled in number.

The Black Death prompted aristocratic landowners to dispose of their estates, as the high death toll meant that they no longer had access to the labour with which to cultivate them. At the same time, the gentry and professional classes sought to buy up land as a means of social advancement, resulting in a widespread downward redistribution of land.

In light of the fact that during this period labour shortages made land much less profitable in terms of agricultural production, we might expect property prices to have fallen.

Instead, this research demonstrates that this was not the case: the price of freehold land remained robust and certain types of property (such as manors and residential buildings) even rose in value. This is attributed to the fact that increasing geographical and social mobility during this period allowed for greater opportunities for property acquisition, and thus the development of property as a commercial asset.

This is indicated by changes in patterns of behaviour among buyers. The data suggest that an increasing number of people from the late fourteenth century onwards engaged in property speculation – in other words, purchase for the purposes of investment rather than consumption.

These investors purchased multiple properties, often at a considerable distance from their place of residence, and sometimes clubbed together with other buyers to form syndicates. They were often wealthy London merchants, who had acquired large amounts of disposable capital through their commercial activities.

The commodification of housing is a subject that has been much debated in recent years. By exploring the origins of property as an ‘asset class’ in the pre-modern economy, this research draws inevitable comparisons with the modern context: in medieval times, much as now, ‘bricks and mortar’ were viewed as a secure financial investment.

Employment, retirement and pensions: the Victorian era as a golden age for the elderly

by Tom Heritage (University of Southampton)

Elderlyspinnera
Irish spinning wheel – around 1900
Library of Congress collection

For far too long, our elderly ancestors have been viewed through the prism of the National Health Service and the modern welfare state: old people are regarded as a burden, taking out of society rather than contributing. In contrast, this study of census data for five counties across England and Wales from 1851 to 1911 reveals a reciprocal relationship between those living in old age and wider society.

First, across the whole period, 86-93% of men aged 60 and over were in employment. Even if we exclude those in workhouses, the figure is 80-85%.

Most old men worked in agricultural and general labouring, although an increase was evident by 1911 in the mining industry in Glamorgan and metal manufacturing in Sheffield. Bricklaying, house painting, dock labouring and commercial sales were also pursued in urban areas. Labour force participation rates were higher among men in their sixties than among men in their seventies and eighties.

Second, from 1851 to 1911, between a sixth and a third of women aged over 60 were in employment. Although their occupations were less diverse than those of men, the majority were based in domestic service.

Old women were also involved in cotton and silk textiles and in the manufacture of straw hats. Over time, though, the employment rates of old women did not increase like those of men, owing partly to foreign competition in Asian straw imports and French silks.

Third, retirement was not an innovation brought about by the creation of old age pensions. As early as 1891, over 13% of old men were described in the census as ‘retired’, with high rates in the areas favoured by today’s retirees: the coastal areas of Christchurch and Portsmouth in southern England. More old people retired than went into the workhouse.

But retirement was only an option for those who had inherited or managed to accumulate wealth, such as former smallholders, grocers, innkeepers, civil servants or military officers. Others who lacked land or capital, for example agricultural labourers, or boot and shoe makers were forced to resort to the Poor Law.

Even then, this did not always, or usually, mean the workhouse. Welfare assistance to old people in their own homes was common, especially for women. ‘Outdoor relief’, usually around 2s 6d per week, was issued as a weekly ‘pension’.

Moreover, the women who received it were not always as old as those entitled to a pension in the modern era: in Yorkshire in 1891, over 10% of old women described as ‘on relief’ were under 66, which will be the minimum pension age for women by 2020.

So is it really true to say that nowadays, ‘the elderly have never had it so good’? In a sense it is, as old people lead healthier and longer lives today than they have ever done.

But it would be wrong to conclude that old people in Victorian times were largely condemned to lives of pain and poverty. They had a wide range of experiences, and many had access to employment opportunities and sources of assistance that are no longer offered.

In terms of present day policy, we might learn something from our Victorian forebears about ways to integrate the general population in their sixties into the workforce, so that they can contribute to society as well as receive welfare.

Mortality in economic downturns: unobserved migration can create the false impression that recessions are good for health

by Vellore Arthi (University of Essex), Brian Beach (College of William & Mary), and Walker Hanlon (University of California, Los Angeles)

volga-germans-us

Are recessions good for health? A number of recent studies suggest that mortality actually goes down during recessions – at least in developed countries, where social safety nets help cushion the blow of unemployment and income loss.

This striking conclusion rests on one of two assumptions: either that people do not respond by migrating away from recession-stricken areas; or that if they move, these population flows can be perfectly measured. But are these assumptions realistic?

Migrant movements can be notoriously difficult to track, and famous episodes such as the Depression-era migration from the US Great Plains to California suggest that these sorts of internal population movements may indeed be a natural response to changes in local economic conditions. This raises the question: what does unaccounted migration mean for our assessment of the recession-mortality relationship?

Our research shows that unobserved migration from recession-stricken regions may actually lead us to underestimate systematically how deadly recessions really are.

To test how migration influences estimates of the relationship between recessions and mortality, we draw on a unique historical natural experiment: the temporary but severe economic downturn in the cotton textile-producing regions of Britain that resulted from the American civil war (1861-65).

The cotton textile industry was England’s largest industrial sector in the second half of the nineteenth century and, prior to the civil war, received the majority of its raw cotton inputs from the American South. The onset of the civil war sharply reduced these supplies, leading to a severe but temporary economic downturn that left several hundred thousand workers unemployed.

Digitising a wealth of historical data on births, deaths and population, and exploiting variation in both the geographical distribution of the British cotton textile industry and the timing of the civil war, we show that standard approaches yield the familiar result: the downturn, popularly termed the ‘cotton famine,’ reduced mortality.

But we also find evidence that migratory responses to this event were substantial, with much of this mobility occurring over short distances, as displaced cotton workers sought opportunities for work in nearby districts.

After making a series of methodological adjustments that account for this recession-induced migration, we show that the sign of the recession-mortality relationship flips: this downturn in fact appears to have been bad for health, raising mortality in both cotton regions and in the regions to which unemployed cotton operatives fled.

After accounting for migration bias, we find that:

  • The civil war-era downturn in the cotton textile regions of Britain increased total mortality in the affected districts
  • But the downturn appears to have led to improved infant and maternal mortality outcomes, probably by freeing up maternal time for breastfeeding, childcare, and other health-improving behaviours.
  • Gains in infant health were offset by large and significant increases in mortality among the elderly.
  • There was no net effect on mortality among working-age adults, who were also the most mobile during the downturn.
  • This outcome appears to have been driven by worsening mortality due to the deteriorating nutrition and living conditions associated with income loss, which was in turn offset by improvements in maternal mortality and by fewer deaths by accidents and violence. (The latter finding is further supported by evidence that alcohol consumption and industrial accident rates fell during the recession.)

Our study provides both a methodological and factual contribution to our understanding of the relationship between recessions and health. The methodological contribution consists of showing that migration undertaken in response to a recession has the potential to introduce substantial bias into estimates of the recession-mortality relationship using the standard approach – particularly if these population flows are not well measured.

This bias is likely to be greater in settings, such as developing countries, where labour forces are more mobile, where weak social safety nets induce migration in response to recessions, and where the intercensal population data used to track these movements are poor. Studies applying the standard approach in these settings are likely to generate misleading results, which may lead to poorly targeted public health responses.

On a factual level, our study also contributes new evidence on the relationship between recessions and mortality in a historical setting, with the implication that studies focused on just one age group, such as infants, may generate results that are not representative of other segments of the population, or indeed of the overall relationship between recessions and mortality.

 

 

How to achieve a more compassionate capitalism: look back to medieval Cambridge

by Catherine Casson (University of Manchester), Mark Casson (University of Reading), John Lee (University of York), Katie Phillips (University of Reading)

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How can modern economies reconcile the pursuit of international competitiveness with promotion of the common good? They could learn from the medieval period!

Contrary to popular belief, England in the late thirteenth century had a dynamic economy. Legal advances created a lively property market; cutting-edge technologies improved water management and bridge-building; commodity trade expanded; and towns grew dramatically, both in number and size.

But this was not an early form of individualistic capitalism. Family bonds were strong and community loyalty was intense. Economic ‘winners’ showed compassion for losers, rather than contempt.

Thirteenth-century expansion was not based on a consumer-driven boom. Its focus was on local infrastructure and local wellbeing. City churches were financed by local people to meet the needs of local people. Hospitals cared for the old, the poor and the needy, including special facilities for those affected by disease. Their legacy remains with us today: the most valuable real estate in a modern city is often occupied by medieval churches and hospitals.

Using recently discovered documents and novel statistical techniques, we have analysed the histories of over one thousand properties in medieval Cambridge over this period. Using evidence from the so-called ‘Second Domesday’ – the Hundred Rolls of 1279 – we show how wealth accumulated by successful businesses was recycled back into the community through support for local churches and hospitals and for itinerant preachers based in the town.

Town government was devolved by the king and queen to the mayor and bailiffs, and they encouraged the development of guilds, which promoted cooperation. New professions emerged in response to the growing demand for legal and administrative services.

The business centre of Cambridge shifted south as the town expanded. ‘New wealth’ replaced ‘old wealth’ as a local commercial class replaced Norman aristocrats. But local pride and religious devotion – expressed through high levels of charitable giving – helped spread the economic benefits throughout the town community.

This self-sustaining system was, however, broken in the 1340s by the Black Death, the outbreak of the Hundred Years War and the punitive levels of taxation imposed on towns thereafter. When prosperity returned in the Tudor period, a more ruthless form of capitalism took root, and it is this ruthless form of capitalism whose legacy remains with us today.

How new technology affects educational choices: lessons from English apprenticeships after the arrival of steam power

by Alexandra de Pleijt (Utrecht University), Chris Minns and Patrick Wallis (London School of Economics)

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Many workers today worry whether robots will do away with their jobs. Most economists argue that the effect of automation is likely to depend on what workers do. Robots may replace some types of manual work, but new jobs will also be created to design, maintain and manage automated production.

A shift towards ‘new jobs’ would mean that different skills will be valued in the future, and many policy experts have argued that secondary and post-secondary education will have to change in response. But if young people and their parents anticipate how automation will affect their job prospects, the choices made among current educational opportunities could shift ahead of any changes in what is offered.

The effects of automation on educational choice will be seen in the future. But past experience can offer some ideas as to whether the arrival of new technology affects these choices, even before the technology is widespread.

This research examines how the arrival of a new production technology affected educational choices in late eighteenth century England. The period between 1760 and 1810 is at the beginning of the largest shift in history from hand- to machine-powered production, through the invention and spread of the steam engine that powered the British Industrial Revolution.

Our research combines detailed evidence on the location and timing of the adoption of steam engines with the records of over 300,000 English apprenticeships from the rolls of the Commissioner of Stamps.

The main finding is that the arrival of steam power changed the willingness of young people to pursue apprenticeships, which for centuries had been the main route to acquiring the skills required for the production of manufactured goods. Counties saw a fall of 40-50% in the share of population entering into textile apprenticeships once a steam engine was present.

Despite the possible association with machine design and maintenance, mechanical apprenticeships also saw a decline of just under 20% following the arrival of steam. Merchant and professional apprentices, who were trading the goods produced by craft or industry, were mostly unaffected.

These findings show that the workforce responded to the emergence of technology that would dramatically change the nature of production and work in the future, but that much of the response was local. Apprenticeships fell first in northern counties where industrial towns and cities with factory-based production had emerged earlier. A similar decline in how workers were trained was not seen in southern and eastern England in the early part of the Industrial Revolution.

 

WELFARE SPENDING DOESN’T ‘CROWD OUT’ CHARITABLE WORK: Historical evidence from England under the Poor Laws

Cutting the welfare budget is unlikely to lead to an increase in private voluntary work and charitable giving, according to research by Nina Boberg-Fazlic and Paul Sharp.

Their study of England in the late eighteenth and early nineteenth century, published in the February 2017 issue of the Economic Journal, shows that parts of the country where there was increased spending under the Poor Laws actually enjoyed higher levels of charitable income.

refusing_a_beggar_with_one_leg_and_a_crutch
Edmé Jean Pigal, 1800 ca. An amputee beggar holds out his hat to a well dressed man who is standing with his hands in his pockets. Artist’s caption’s translation: “I don’t give to idlers”. From Wikimedia Commons

 

 

The authors conclude:

‘Since the end of the Second World War, the size and scope of government welfare provision has come increasingly under attack.’

‘There are theoretical justifications for this, but we believe that the idea of ‘crowding out’ – public spending deterring private efforts – should not be one of them.’

‘On the contrary, there even seems to be evidence that government can set an example for private donors.

Why does Europe have considerably higher welfare provision than the United States? One long debated explanation is the existence of a ‘crowding out’ effect, whereby government spending crowds out private voluntary work and charitable giving. The idea is that taxpayers feel that they are already contributing through their taxes and thus do not contribute as much privately.

Crowding out makes intuitive sense if people are only concerned with the total level of welfare provided. But many other factors might play a role in the decision to donate privately and, in fact, studies on this topic have led to inconclusive results.

The idea of crowding out has also caught the imagination of politicians, most recently as part of the flagship policy of the UK’s Conservative Party in the 2010 General Election: the so-called ‘big society’. If crowding out holds, spending cuts could be justified by the notion that the private sector will take over.

The new study shows that this is not necessarily the case. In fact, the authors provide historical evidence for the opposite. They analyse data on per capita charitable income and public welfare spending in England between 1785 and 1815. This was a time when welfare spending was regulated locally under the Poor Laws, which meant that different areas in England had different levels of spending and generosity in terms of who received how much relief for how long.

The research finds no evidence of crowding out; rather, it finds that parts of the country with higher state provision of welfare actually enjoyed higher levels of charitable income. At the time, Poor Law spending was increasing rapidly, largely due to strains caused by the Industrial Revolution. This increase occurred despite there being no changes in the laws regulating relief during this period.

The increase in Poor Law spending led to concerns among contemporary commentators and economists. Many expressed the belief that the increase in spending was due to a disincentive effect of poor relief and that mandatory contributions through the poor rate would crowd out voluntary giving, thereby undermining social virtue. That public debate now largely repeats itself two hundred years later.

 

Summary of the article ‘Does Welfare Spending Crowd Out Charitable Activity? Evidence from Historical England under the Poor Laws’ by Nina Boberg-Fazlic (University of Duisberg-Essen) and Paul Sharp (University of Southern Denmark). Published in  Economic Journal, February 2017