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The three horsemen of riches: Plague, war and urbanization in early modern Europe

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  • Nico Voigtländer
  • Joachim Voth

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Abstract

How did Europe escape the "Iron Law of Wages?" We construct a simple Malthusian model with two sectors and multiple steady states, and use it to explain why European per capita incomes and urbanization rates increased during the period 1350-1700. Productivity growth can only explain a small fraction of the rise in output per capita. Population dynamics – changes of the birth and death schedules – were far more important determinants of steady states. We show how a major shock to population can trigger a transition to a new steady state with higher per-capita income. The Black Death was such a shock, raising wages substantially. Because of Engel's Law, demand for urban products increased, and urban centers grew in size. European cities were unhealthy, and rising urbanization pushed up aggregate death rates. This effect was reinforced by diseases spread through war, financed by higher tax revenues. In addition, rising trade also spread diseases. In this way 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. We thus trace Europe’s precocious rise to economic riches to interactions of the plague shock with the belligerent political environment and the nature of cities.

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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: Jun 2012
Handle: RePEc:upf:upfgen:1115

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

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. War was good
    by Economic Logician in Economic Logic on 2008-11-11 11:26:00
  2. “The Three Horsemen of Riches: Plague, War and Urbanization in Early Modern Europe,” N. Voigtlander & H.-J. Voth (2012)
    by afinetheorem in A Fine Theorem on 2012-05-30 05:02:00
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Cited by:
  1. Denis COGNEAU, 2012. "The Political Dimension Of Inequality During Economic Development," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 35, pages 11-36.
  2. Nicola Gennaioli & Hans-Joachim Voth, 2013. "State Capacity and Military Conflict," Working Papers 593, Barcelona Graduate School of Economics.
  3. Michael Bar & Oksana Leukhina, 2010. "The role of mortality in the transmission of knowledge," Journal of Economic Growth, Springer, vol. 15(4), pages 291-321, December.
  4. Strulik, Holger, 2010. "Knowledge and Growth in the Very Long-Run," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover dp-459, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  5. Lemin Wu & Rohan Dutta & David K Levine & Nicholas W Papageorge, 2014. "Entertaining Malthus: Bread, Circuses and Economic Growth," Levine's Bibliography 786969000000000853, UCLA Department of Economics.
  6. Holger Strulik, 2012. "From Worship to Worldly Pleasures: Secularization and Long-Run Economic Growth," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 116, Courant Research Centre PEG.
  7. Dietrich Vollrath, 2011. "The agricultural basis of comparative development," Journal of Economic Growth, Springer, vol. 16(4), pages 343-370, December.
  8. 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.

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