Malthus and Pre-Industrial Stagnation

The past two hundred years have seen a remarkable transformation in the standard of living of a substantial fraction of the world’s population. Since about 1800, real wages of ordinary workers in Western Europe and North America have risen steadily by roughly one to two percent per year. This has lead to a cumulative increase in real wages of a staggering 1500%. In sharp contrast, real wages of ordinary workers seem to have been largely stagnant before 1800. Figure 1 plots the real wage of laborers in the building industry in England from 1250 to 2000 on a logarithmic scale. The figure suggests that real wages in England were not trending upward before 1800. There were fluctuations. In particular, wages rose substantially between 1350 and 1450 as plagues ravished Europe. But they then subsequently fell back close to their prior level. As a consequence, real wages in 1750 were not very different from their level 500 years earlier. The data series in Figure 1 was constructed by the economic historian Gregory Clark (building on earlier work by many scholars).1 Constructing such a series for a 750 year period is a monumental task. Recall that real wages refer to money wages adjusted for changes in the general price level. To construct a series for real wages, one must therefore gather data both on wages and prices. Clark’s wage and price data come from the accounts of manors, monasteries, churches, colleges, charitable foundations, towns, guilds, and private households from all over England. Many complications arise when constructing this data series. It is worth thinking carefully about how this is done. For wages, the main complication is to adjust for changes in the composition of the dataset over time, i.e., compare “apples with apples.” For example, wages differed from location to location. It is therefore important to adjust for variation over time in the geographical composition of the dataset (otherwise and increase in the and index may be simply due to a larger fraction