Working Paper: CEPR ID: DP6356
Authors: Kevin H. O'Rourke; Joan R. Ross; Jeffrey G. Williamson
Abstract: The endogenous growth literature has explored the transition from a Malthusian world where real wages, living standards and labour productivity are all linked to factor endowments, to one where (endogenous) productivity change embedded in modern industrial growth breaks that link. Recently, economic historians have presented evidence from England showing that the dramatic reversal in distributional trends ? from a steep secular fall in wage-land rent ratios before 1800 to a steep secular rise thereafter ? must be explained both by industrial revolutionary growth forces and by global forces that opened up the English economy to international trade. This paper explores whether and how the relationship was different for Spain, a country which had relatively poor productivity growth in agriculture and low living standards prior to 1800, was a late-comer to industrialization afterwards, and adopted very restrictive policies towards imports for much of the 19th century. The failure of Spanish wage-rental ratios to undergo a sustained rise after 1840 can be attributed to the delayed fall in relative agricultural prices (due to those protective policies) and to the decline in Spanish manufacturing productivity after 1898.
Keywords: distribution; globalization; growth; spain
JEL Codes: F1; N7; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Protective trade policies (F13) | Wage-rental ratios (D33) |
| Decline in manufacturing productivity post-1898 (N61) | Wage-rental ratios (D33) |
| Relative price of agricultural products (Q11) | Wage-rental ratios (D33) |
| Agricultural productivity (Q11) | Wage-rental ratios (D33) |
| Global market integration (F61) | Domestic economic conditions (F49) |