History Faculty Publications

Document Type

Article

Abstract

Historical wage and incomes data are informative both as normative measures of living standards, and as indicators of patterns of economic development. We show that, given limited historical data, median incomes are most appropriate for measuring welfare and inequality, while urban unskilled wages can be used to test dualist models of development. We present a new dataset including both series in Mexico from 1800 to 2015 and find that both have historically failed to keep up with aggregate growth: per worker GDP is now over eight times higher than in the nineteenth century, while unskilled urban real wages are only 2.2 times higher, and median incomes only 2.0 times. From the perspective of inequality and social welfare, our findings confirm that there is no automatic positive relationship between economic growth and rising living standards for the majority. From the perspective of development, we argue that these findings are consistent with a dual economy model incorporating Lewis’s assumption of a reserve army of labour, and explain why Kuznets's predicted decline in inequality has not occurred.

Publication Date

11-22-2020

Publication Title

Economic History Review

Publisher

John Wiley & Sons Ltd

DOI

https://doi.org/10.1111/ehr.13027

Start Page No.

1

End Page No.

27

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