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Land, Labor and the Wage-Rental Ratio: Factor Price Convergence in the Late Nineteenth Century

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  • Kevin O'Rourke
  • Alan M. Taylor
  • Jeffrey G. Williamsmn

Abstract

This paper augments the new historical literature on factor price convergence. The focus is on the late nineteenth century, when economic convergence among the current OECD countries was dramatic; and the focus is on the convergence between Old World and New, by far the biggest participants in the global convergence during the period; and the focus is on land and labor, the two most important factors of production in the nineteenth century. Wage-rental ratios boomed in the Old World and collapsed in the New, moving the resource-rich and labor scarce New World closer to the resource-scarce and labor-abundant Old World. The paper uses both computable general equilibrium models and econometrics to identify the forces causing the convergence. These include: commodity price convergence and the Heckscher-Ohlin Theorem of factor price equalization; migration, capital-deepening and frontier disappearance, factors stressed by Malthus, Ricardo, Wicksell and Viner; and factor-saving biases associated with induced-innovational theory, an endogenous response to relative factor scarcities.

Suggested Citation

  • Kevin O'Rourke & Alan M. Taylor & Jeffrey G. Williamsmn, 1996. "Land, Labor and the Wage-Rental Ratio: Factor Price Convergence in the Late Nineteenth Century," NBER Historical Working Papers 0046, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberhi:0046
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    Cited by:

    1. Reto Bertoni & Henry Willebald, 2015. "Do energy natural endowments matter? New Zealand and Uruguay in a comparative approach (1870-1940)," Documentos de trabajo 35, Programa de Historia Económica, FCS, Udelar.
    2. Francisco J. Beltran Tapia & Julio Martinez-Galarrage, 2015. "Inequality and poverty in a developing economy: Evidence from regional data (Spain, 1860-1930)," Working Papers 0078, European Historical Economics Society (EHES).
    3. Jeffrey G. Williamson, 2006. "Inequality and Schooling Responses to Globalization Forces: Lessons from History," NBER Working Papers 12553, National Bureau of Economic Research, Inc.
    4. O'Rourke, K. & Williamson, J.G. & Hatton, T.J., 1993. "Mass Migration, Commodity Market Integration, and Real Wage Convergence: The Late Nineteenth Century Atlantic Economy," Harvard Institute of Economic Research Working Papers 1640, Harvard - Institute of Economic Research.
    5. Gianfranco Di Vaio & Kerstin Enflo, 2009. "Did Globalization Lead to Segmentation? Identifying Cross-Country Growth Regimes in the Long-Run," Working Papers CELEG 0902, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    6. White, Eugene N., 1996. "The past and future of economic history in economics," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(Supplemen), pages 61-72.
    7. Liu, Dan & Meissner, Christopher M., 2015. "Market potential and the rise of US productivity leadership," Journal of International Economics, Elsevier, vol. 96(1), pages 72-87.
    8. Kevin H. O'Rourke, 2002. "Globalization and Inequality: Historical Trends," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 57(01), pages 65-104, March.
    9. Henry Willebald & Marc Badia-Miró & Vicente Pinilla, 2015. "Natural Resources and Economic Development. Some lessons from History," Documentos de Trabajo (DT-AEHE) 1504, Asociacion Espa–ola de Historia Economica.
    10. Fabrice Murtin & Martina Viarengo, 2010. "American education in the age of mass migrations 1870–1930," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 4(2), pages 113-139, June.
    11. Prados de la Escosura, Leandro, 2000. "International Comparisons of Real Product, 1820-1990: An Alternative Data Set," Explorations in Economic History, Elsevier, vol. 37(1), pages 1-41, January.
    12. repec:kap:reveho:v:15:y:2017:i:3:d:10.1007_s11150-015-9286-9 is not listed on IDEAS

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