Between conquest and independence: Real wages and demographic change in Spanish America, 1530–1820
with Elwyn Davies and Jan Luiten van Zanden
Explorations in Economic History, 2012.
On the basis of a newly constructed dataset, this paper presents long-term series of the price levels, nominal wages, and real wages in Spanish Latin America – more specifically in Mexico, 13 Peru, Bolivia, Colombia, Chile, and Argentina – between ca. 1530 and ca. 1820. It synthesizes 14 the work of scholars who have collected and published data on individual cities and periods, 1351 and presents comparable indices of real wages and prices in the colonial period that give a reasonable guide to trends in the long run. We show that wages and prices were on average much higher than in Western Europe or in Asia, a reflection o f the low value of silver that must have had consequences for competitiveness of the Latin American economies. Labour scarcity was the second salient feature of Spanish Latin America and resulted in real wages much above subsistence and in some cases (Mexico, Bolivia, Argentina) comparable to levels in Northwestern Europe. For Mexico, this was caused by the dramatic decline of the population after the Conquest. For Bolivia, the driving force was the boom in silver mining in Potosi that created a huge demand for labour. In the case of Argentina, low population density was a pre-colonial feature. Perhaps due to a different pattern of depopulation, the real wages of other regions (Peru, Colombia and Chile) were much lower, and only increased above subsistence during the first half of the 18th century. These results are consistent with independent evidence on biological standards of living and with estimates of GDP per capita at the beginning of the 19th century.
Using a new dataset, this paper presents new evidence on inequality in Latin America for the 19th century and studies the effects of factor endowments and trade on inequality. Recent research has highlighted the link between the colonial origins of inequality and its persistence in Latin America. We find that inequality varied substantially throughout the century and across the region. We identify and quantify the impact of changing factor endowments and trade on inequality using a theoretical model of intertemporal inequality transmission based on asset ownership in an open economy subject to shocks. The results indicate that inequality in the Southern Cone rose during the era of globalization while it decreased in Mexico and Venezuela. The rise in inequality in Argentina and Uruguay is explained by the impact of favorable terms of trade and international migration; however, the effect was dampened by significant land annexation. On the other hand, the decline in Mexican and Venezuelan inequality is related to decreasing terms of trade amplified by the expansion of available arable land.
Trade flows among countries have increased dramatically during the last globalization episode creating new winners and losers between and within countries. This paper revisits the contested topic of the impact of globalization on within-country inequality in Latin America from a historical perspective. By comparing the two globalization waves (1870-1914, 1970-present) we look at the link between globalization and inequality. Many Latin American countries are still dependent on exporting raw materials, lack an efficient manufacturing sector, and exhibit the highest inequality rates in the world. One hundred years ago, several decades after independence, the region was also highly unequal, specialized in a handful of commodity exports, and had not made the transition to industrialization. The results indicate that the effect of globalization on inequality operates mainly inducing changes in factor endowments while the adoption of labor-saving technologies appears influential in both periods.
Research in pictures: old accounting books, newspapers, and graphical representation of historical data.