DP14652 Italy and the Industrial Revolution: Evidence from Stable Employment in Rural Areas

Author(s): Mauro Rota, Jacob Weisdorf
Publication Date: April 2020
Keyword(s): economic growth, Great Divergence, industrial revolution, living standards, prices, Stable Employment, Wage premia, wages
JEL(s): I3, J3, J4, J8, N33
Programme Areas: Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14652

We provide a first-ever long-run index of wages of stable rural workers in early-modern Tuscany. These wages speak to two longstanding debates. The first concerns whether Italy's early-modern downturn was an urban phenomenon only or an all-embracing one. Our data lend support to the former, since we do not detect any downturn in our early-modern rural wages. The second debate concerns whether high-waged workers prompted the Industrial Revolution. Earlier studies in this debate have been criticised for comparing urban wages when early factories emerged in rural areas. By comparing rural wages, we find that English labour cost only 10 per cent more than their Italian counterparts in 1650, but a staggering 150 per cent more in 1800. The revised timing of the divergence between England and Italy, and its overlap with England's early mechanisation, raise a significant identification problem. Did high wages encourage mechanisation, or did mechanisation boost wages?