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Working paper 225

John H. Munro, "Real Wages and the 'Malthusian Problem' in Antwerp and South-Eastern England, 1400 - 1700: A regional comparison of levels and trends in real wages", 2006-04-10
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Abstract: In a path-breaking but largely overlooked study, published in a festchrift thirty years ago (1975), Herman Van der Wee provided a comparison of prices and real wages of building craftsmen in the regions of Antwerp and south-eastern England, from 1400 to 1700. To do so, he constructed a composite price index modelled as closely as possibly on the famous 'basket of consumables' price index that Phelps Brown and Hopkins had produced, for south-eastern England, in 1956. His graphs revealed that real wages for these craftsmen in Antwerp did not suffer the same deterioration as did comparable real wages in England, and in many other parts of Europe, during the era of the Price Revolution, ca. 1520 - ca. 1640 -- although the actual levels of the real wages were not shown. Most economic historians have attributed that significant fall in real wages, especially in England, to the consequences of population growth during this era: i.e., to a fall in the marginal productivity of labour, with a dramatic alteration in the land:labour ratio. There is, however, an alternative explanation: the consequences of an inflation, induced primarily by monetary forces, when nominal wages failed to keep pace with the rise in consumer prices (especially those for foodstuffs).

This study examines the role of demographic, monetary, and also institutional factors in producing these diverging trends in real-wages. But the major contribution is to expand upon Van der Wee's study -- which used only disembodied index numbers -- by calculating the annual values of the baskets of consumables in both England and the Antwerp region, and thus in presenting the actual levels of real wages, in terms of the number of such baskets that building craftsmen could purchase with their annual money wages (for 210 days of employment), in each region, combining wage rates for summer and winter work (seasonal wages).

The results are very striking. As measured in 50-year harmonic means, the level of real wages for master masons in Antwerp was only 83.79% of that for master masons in south-east England, in 1401-50; and worse, only 78.15% of the level for English masons in 1451-1500; but then real wages for Antwerp master masons began to climb above those for their English counterparts: reaching 102.60% in 1501-50, 136.34% in 1551-1600; and, for the peak achievement, 154.49% in 1601-50, before falling back, somewhat, to a level of 125.58% in the final half century studied, in 1651-1700. But part of that gain or achievement for master masons in Antwerp was at the expense of the real incomes for their journeymen-labourers, who did not fare quite as well, in comparison with the English journeymen labourers: earning just 68.94% of their English counterparts in 1401-50; 69.38% in 1451-1500; 91.18% in 1501-50; 107.60% in 1551-1600; 133.46% in 1601-50; and 109.88% in the final period, 1651-1700. Oddly enough, the Antwerp masons (both masters and journeymen) fared the very best after Antwerp had passed its Golden Age.

The hypothetical explanations for these divergencies may be even more interesting than the data themselves. The study concludes by examining the statistical and theoretical nature of 'real wages': in terms of the purchasing power of the annual nominal money wage; in terms of the marginal productivity of labour; in terms of the marginal revenue product of labour; and in terms of the Total Factor Productivity of the occupation or economy as a whole. These data, however, do not take account of another factor that may have narrowed the gap between the actual levels of consumption in southern England and the Antwerp region: excise taxes on consumption, which had been a basic feature of urban finances in the southern Low Countries since the thirteenth century, but which were introduced into England only in 1643, shortly after the outbreak of the Civil War between Crown and Parliament.

Keywords: prices, nominal wages, real wages, building craftsmen, masons, masters and labourers, inflation, deflation, consumer price index, Antwerp, England.

JEL Classification: C40; C43; C81; D33; E24; E31; E32; E40; E51; F40; J10; J11; J21; J22; J30; J3; J40; J51; J60; J80; L74; N13; N33; N63; N93.