Real Wages in Germany during the First Phase of Industrialization, 1850-1889

Abstract

Abstract The study constructs new wage series at the branch level and aggregates them to an index of nominal wages in industry and urban trades in 18481889. Moreover, the study develops new food price and rent indices. These are then combined with price indices for other categories of household expenditure from Hoffmann (1965) into a consumer price index for 1850-1889. The new real wage index shows little growth for the third quarter of the nineteenth century; the first phase of rapid industrialization from the 1840s to the early 1870s had only a small positive impact on the living standard of the industrial and urban lower classes. Only from the 1880s, when Germany moved into a second phase of industrialization, did the real wage experience a sustained and rapid increase. Nevertheless, the diversification of employment opportunities taking place in the wake of industrialization and the European grain invasion were accompanied by a marked reduction of income volatility among lower-class households already from the 1870s.