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Week4Summary - Week 4 Summary Allen(2001 Explorations in...

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Week 4 Summary Allen (2001), Explorations in Economic History , “Great Divergence in European wages and Prices from the Middle Ages to the First World War.” What are the main points of the article? Paper compares the real wage of building craftsmen (skilled) and laborers (unskilled) across for London and almost 20 cities in other European countries. England and the Low Countries had higher real wages than the rest of European in the 15th century, but the differential was small. Figures 7 and 8. Between 1500- 1750, real wages in Europe diverged. Real wages in Northwest Europe (London, Amsterdam, and Antwerp) remained steady, while declines seen in South and Eastern European until 1850. The emergence of a North South gap within Europe was not the product of developments after the Industrial Revolution, but something that started already from trends during the 17 th and 18 th centuries. Approach All prices and nominal wages are converted into grams of silver. Table 1. Base is the index of consumer prices prevailing in Strasbourg during early 18 th century. For international comparisons, there is the additional difficulty of coming up with a comparable baskets of goods for different countries when consumers are choosing to eat different things, given local prices. Also amounts of fuel and the assumption about expenditure shares of other products must be made, for example, butter vs. olive oil, wheat vs. rye. These directly change the finding on the real wages. Rent is not available for most cities.
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