The Colonial Origins of the Divergence in the Americas: A Labour Market Approach
AbstractPart of a long-run project to put together a systematic database of prices and wages for the American continents, this paper takes a first look at standards of living in a series of North American and Latin American cities. From secondary sources we collected price data that –with diverse degrees of quality– covers various years between colonization and independence and, following the methodology now familiar in the literature, we built estimations of price indexes for Boston, Philadelphia, and the Chesapeake Bay region in North America and Bogotá, Mexico, and Potosí in Latin America exploring alternative assumptions on the characteristics of the reference basket. We use these indexes to deflate the (relatively more scarce) figures on wages, and compare the results with each other, and with the now widely known series for various European and Asian cities. We find that real wages were higher in North America than in Latin America from the very early colonial period: four times the World Bank Poverty Line (WBPL) in North America while only two times the WBPL in Latin America. These wages place the North American colonies among the most advanced countries in the world alongside Northwestern European countries and the Latin American colonies among the least developed countries at a similar level to Southern European and Asian countries. These wage differences existed from the early colonial period because wages in the American colonies were determined by wages in the respective metropoles and by the Malthusian population dynamics of indigenous peoples. Settlers would not migrate unless they could maintain their standard of living, so wages in the colonies were set in the metropole. Political institutions, forced labour regimes, economic geography, disease environments and culture shaped the size of the economy of each colony but did not affect income levels.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 402.
Date of creation: 2011
Date of revision:
Contact details of provider:
Postal: via Rontgen, 1 - 20136 Milano (Italy)
Web page: http://www.igier.unibocconi.it/
Other versions of this item:
- Allen, Robert C. & Murphy, Tommy E. & Schneider, Eric B., 2012. "The Colonial Origins of the Divergence in the Americas: A Labor Market Approach," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 72(04), pages 863-894, December.
- NEP-ALL-2011-07-21 (All new papers)
- NEP-HIS-2011-07-21 (Business, Economic & Financial History)
- NEP-LAB-2011-07-21 (Labour Economics)
- NEP-LAM-2011-07-21 (Central & South America)
- NEP-SEA-2011-07-21 (South East Asia)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Peter H. Lindert & Jeffrey G. Williamson, 2014. "American Colonial Incomes, 1650-1774," NBER Working Papers 19861, National Bureau of Economic Research, Inc.
- Julio Martínez-Galarraga & Marc Prat, 2014. "Wages and prices in early Catalan industrialisation," UB Economics Working Papers 2014/305, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
- Robert Allen, 2013.
"The High wage Economy and the Industrial Revolution: A Restatement,"
Economics Series Working Papers, University of Oxford, Department of Economics
Number 115, University of Oxford, Department of Economics.
- Robert C. Allen, 2013. "The High Wage Economy and the Industrial Revolution: A Restatement," Oxford University Economic and Social History Series, Economics Group, Nuffield College, University of Oxford _115, Economics Group, Nuffield College, University of Oxford.
- Leonor Freire Costa & Nuno Palma & Jaime Reis, 2013. "The great escape? The contribution of the empire to Portugal’s economic growth, 1500-1800," Working Papers in Economic History wp13-07, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.