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The Three Horsemen of Growth: Plague, War and Urbanization in Early Modern Europe

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Author Info
Nico Voigtländer
Joachim Voth ()

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Abstract

How did Europe overtake China? We construct a simple Malthusian model with two sectors and use it to explain why European per capita incomes and urbanization rates surged ahead of Chinese ones. Productivity growth can only explain a small fraction of the rise in living standards. Population dynamics – changes of the birth and death schedules – were far more important drivers of the long-run Malthusian equilibrium. The Black Death raised wages substantially, creating important knock-on effects. Because of Engel’s Law, demand for urban products increased, raising urban wages and attracting migrants from rural areas. European cities were unhealthy, especially compared to Far Eastern ones. Urbanization pushed up aggregate death rates. This effect was reinforced by more frequent wars (fed by city wealth) and disease spread by trade. Thus, higher wages themselves reduced population pressure. We show in a calibration exercise that our model can account for the sustained rise in European urbanization as well as permanently higher per capita incomes in 1700, without technological change. Wars contributed importantly to the ’Rise of Europe,’ even if they had negative short-run effects.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1115.

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Date of creation: Aug 2008
Date of revision: May 2009
Handle: RePEc:upf:upfgen:1115

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Related research
Keywords: Malthus to Solow; Long-run Growth; Great Divergence; Epidemics; Demographic Regime;

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Find related papers by JEL classification:
E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation
N13 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - Europe: Pre-1913
N33 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - Europe: Pre-1913
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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  11. Nico Voigtländer & Joachim Voth, 2008. "The Three Horsemen of Growth: Plague, War and Urbanization in Early Modern Europe," Economics Working Papers 1115, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
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  27. Gary D. Hansen & Edward C. Prescott, 2002. "Malthus to Solow," American Economic Review, American Economic Association, vol. 92(4), pages 1205-1217, September. [Downloadable!]
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  28. Nico Voigtlander & Hans-Joachim Voth, 2009. "Malthusian Dynamism and the Rise of Europe: Make War, Not Love," American Economic Review, American Economic Association, vol. 99(2), pages 248-54, May. [Downloadable!]
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  30. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal Of Fortune: Geography And Institutions In The Making Of The Modern World Income Distribution," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1231-1294, November. [Downloadable!] (restricted)
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  1. Voigtländer, Nico & Voth, Hans-Joachim, 2009. "The Three Horsemen of Growth: Plague, War and Urbanization in Early Modern Europe," CEPR Discussion Papers 7275, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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