Urban Real Wages Research Articles

Inequality, living standards, and growth: two centuries of economic development in Mexico†

AbstractHistorical wage and income data provide both normative measures of living standards, and indicators of patterns of economic development. This study shows that, given limited historical data, median incomes are most appropriate for measuring welfare and inequality, while urban unskilled wages can be used to test dualist models of development. We present new estimates of these series for Mexico from 1800 to 2015 and find that both have historically failed to keep up with aggregate growth: GDP per worker is now over eight times higher than in the nineteenth century, while unskilled urban real wages are only 2.2 times higher, and national median incomes only 2.0 times higher. From the perspective of inequality and social welfare, our findings confirm that there is no automatic positive relationship between economic growth and rising living standards for the majority. From the perspective of development, we argue that these findings are explained by a dual economy model incorporating Lewis's assumption of a reserve army of labour, and we explain why the decline in inequality predicted by Kuznets has not occurred.

Origins of Europe’s north-south divide: Population changes, real wages and the ‘little divergence’ in early modern Europe

In this paper, I investigate the “little divergence” of late medieval and early modern Europe, focusing on the long run response of real wages to demographic changes. Through a quantitative analysis of the 14th–18th centuries series of real wages and population shocks in fourteen European cities, I find that in four north-western cities (Amsterdam, Antwerp, London, and Oxford) the urban real wages were detached from population before the Industrial Revolution, while, in the central and southern Europe wages had a moderate or negative response to population changes. In addition, I show that this different response dates back to the 16th century. I claim, that these two results support three possibly non alternative interpretations of the “little divergence”, either based on changes of fertility regimes, rural and urban labor organizations, or on the onset, in early modern north-western Europe, of non strictly Malthusian growth mechanisms.

Wage forms, costs of living and the urban–rural wage gap: Southern Sweden, 1881–1930

One common finding of studies of industrialising economies in the nineteenth and twentieth centuries is the existence of an urban–rural nominal wage gap. For the analysis of its causes and context it is however essential to know the extent to which the gap is due to urban–rural differences in payments in kind, cost of living and consumption patterns. Only a few studies have tried to estimate the real urban–rural wage gap though. This paper belongs to this stream of literature, aiming to develop a method for the estimation of the real wage gap given the kind of data available in the Swedish context, and to use it to estimate the real wage gap for Malmö County in 1881–1930. The main result is that the gap is reduced to about one-half of its nominal size when differences in payments in kind, cost of living and consumption patterns are accounted for. The real wage gap was still substantial though, and the trend was increasing. While urban real wages were ranging from 10% less to 40% more than agrarian wages in the nineteenth century, urban real wages were 30–100% above agrarian wages in the 1920s.

The Effect of Foreign Direct Investment on the Urban Wage in China: An Empirical Examination

How does foreign direct investment (FDI) affect the wage levels of cities in a host country? This paper uses a panel dataset of Chinese cities to examine the impact of inward FDI on the urban real wage. The results suggest that the existence of FDI has a significant and positive effect on urban real wages and that this impact remains significant after controlling for other city characteristics. Cross-city variation of FDI intensity is one important factor contributing to intercity wage inequality.

The sensitivity of developing countries to external shocks in an interdependent world

North-South interdependence is illustrated by means of a general equilibrium model, in which the rural and urban sectors are treated entirely separately and urban real wages are downward rigid. We explain why such an approach may be more meaningful for long-run analysis than one that stresses the role of demand. The model's properties are illustrated by a theoretical analysis based on a simplified version of the system, and by simulations based on assumptions made by World Bank Staff in the 1983 World Development Report.

Urban Real Wages and the Nigerian Trade Union Movement, 1939-60

Urban Real Wages and the Nigerian Trade Union Movement, 1939-60