June 14th, 2018
(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: firstname.lastname@example.org
Back in March, I posted a summary of some research by Jane Humphries and Jacob Weisdorf on the onset of economic growth. Their paper documented annual labor contract terms in England over several centuries, and compared those to the typical day labor rates that have been used in economic history to study the onset of growth and the effects of the Industrial Revolution. The short version of that paper is that the annual labor contracts starting seeing sustained growth in their value around 1650 or so, far sooner than the day wages indicated. This pushes back the origin of economic growth to well before the actual technological IR, and this also matches the data on GDP per capita developed by Broadberry, Campbell, Klein, Overton, and van Leeuwen in British Economic Growth, 1270-1870.
One thing that I didn’t address in my post, but which came up in a few replies I saw, was whether the data on annual contracts (and on GDP per capita) indicate a rise in living standards. Let’s take the day wage data as factually correct, and those day wages remained roughly constant from 1650-ish to 1850-ish. This has several implications. First, people that did work for day wages in this period would only see their annual income rise by working more days or hours per day. Second, if the value of annual contracts were tied in some way to the day wage, then annual contracts rose in value also due to rising work effort in days/hours. For both types of workers this doesn’t seem to indicate that they are better off, just working more hours.
And what little evidence we do have on actual hours worked does seem to indicate that they increased a lot in the period around the actual Industrial Revolution. Hans-Joachim Voth, in two papers from 1998 and 2001, as well as a book Time and Work During the Industrial Revolution, provided estimates of work hours based on court records. Around 1760, annual hours were about 2500, while in 1800 and 1830 annual hours were about 3300, before dropping back to about 2700 in 1870. In the period of the actual (technological) Industrial Revolution, it would appear that work hours did rise substantially. We know the day wages did not rise until around 1850-ish. But with the rise in hours worked, the annual income of a worker would have risen during the early 1800’s. We might assume that those workers on annual contracts, if they were part of the same labor market, would also have seen their hours rise, and hence their annual income growth was due to more work time as well.
This doesn’t settle anything, however. The HW data indicate that the value of annual contracts began to grow in the middle of the 1600’s, well before the rise in hours documented by Voth. If annual hours were consistent at 2500 from 1650 to 1750, then that means the rise in annual contracts represented growth in the implicit income per hour for those workers as well. On the other hand, you could argue that even the growth that HW document was driven by hours. In the 100 years from 1650 to 1750, HW estimate annual contracts grew in value by 67%-ish. If that was driven entirely by an increase in hours worked, then hours worked had to grow by about 67% as well. That would mean that in 1650 annual hours worked on these contracts were around 1,500. Is that reasonable? I don’t know that there is an obvious answer to that question. There is plenty of evidence for long idle periods in agricultural work, and so 1,500 hours in a year might have been the normal amount expected in 1650. On the other hand, that seems like a huge increase in hours worked.
But let’s assume that even the rise in annual contract value was driven entirely by an increase in hours worked. And let’s stretch this argument out so that while annual contracts (as well as GDP per capita) started growing in 1650, it wasn’t until 1850 that this was because day/hour rates rose. Does this mean that the growth in annual contracts and GDP per capita did not represent a rise in living standards until 1850?