Readings for the Next Lectures Mokyr, Joel (2008), The Contribution of Economic History to the Study of Innovation and Technical Change, in Handbook of the Economics of Innovation De Vries, Jan (1994), The Industrial Revolution and the Industrious Revolution, Journal of Economic History J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 1 / 29
Progress Beyond the Standard of Living So what was evolving in centuries leading up to Industrial Revolution? The security of property and personal security Complete and competitive markets Interest rates (and time preference rates) Work habits Human capital J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 2 / 29
Personal Security on the Eve of Industrialization Homicide rate is number of homicides per 100,000 population Homicide rate for VA is 3.7 per 100,000 in 2012 J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 3 / 29
Personal Security on the Eve of Industrialization Homicide rate is number of homicides per 100,000 population Homicide rate for RVA was 27 in 2007 and 47.3 in 2004 J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 4 / 29
Markets and Market Integration J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 5 / 29
Interest Rates J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 6 / 29
Why did interest rates fall? r = ρ + d + ψg y d - default risk premium, probably didn t fall much from medieval times to the Industrial Revolution ψg y - growth premium, not relevant because there was no sustained growth in income before the Industrial Revolution ρ - time preference rate, very high for early societies, people getting more patient could explain fall in interest rates J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 7 / 29
Work Habits Male Labor Hours per Day Group or location Group or activity Hours Tatuyo shifting cultivation, hunting 7.6 Mikea shifting cultivation, foraging 7.4 Ache hunting 6.9 Abelam subsistence agriculture, hunting 6.5!Kung foraging 6.4 Machiguenga shifting cultivation, foraging, hunting 6 Xavante shifting cultivation, hunting 5.9 Aruni subsistence agriculture 5.2 Mekranoti shifting cultivation, foraging, hunting 3.9 Shipibo subsistence agriculture, fishing 3.4 Bemba shifting cultivation, hunting 3.4 Hiwi hunting 3 Yanomamo shifting cultivation, foraging, hunting 2.8 Britain, 1800 farm laborers, paid labor 8.2 London, 1800 all workers, paid labor 9.1 United Kingdom, 2000 all workers aged 16-64 8.8 J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 8 / 29
Human Capital Human capital is the set of skills and knowledge a worker possesses With the little evidence we have available, it looks like human capital increased in the decades before the Industrial Revolution Where does this evidence come from? J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 9 / 29
Where does this evidence on the education of society come from? Not much data out there measuring actual education level Can find crude measures of literacy and numeracy which serve as proxies for education Still problems with measuring literacy and numeracy Indirect evidence comes from the kinds of documents that survive and how many documents survive Look at things like how well people could report their ages, whether they could sign their name J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 10 / 29
Age Heaping Age heaping occurs when people round to ages ending in zero or five when estimating their ages. If everyone reported age correctly, 20 percent of the population would report an age ending in a zero or five. If everyone rounded, 100 percent would report an age ending in a zero or five (20 percent of these people would get lucky and actually be correct). H = 5 (X 20) 4 When X = 20, H = 0 and when X = 100, H = 100. J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 11 / 29
Age Heaping An alternative measure is the Whipple Index (George Whipple, 1866-1924) Focuses on the population between ages 23 and 62 Pop 0,5 is the number of people with an age ending in 0 or 5 Pop all is the total population W = 500 Pop 0,5 Pop all W = 100 when 20 percent have an age ending in 0 or 5 W = 500 when 100 percent have an age ending in 0 or 5 J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 12 / 29
100 150 200 250 300 Age Heaping and Illiteracy Figure 6. Age heaping and illiteracy in three U.S. censuses Age heap 50 0 20 40 60 80 100 Illiteracy white black foreign Fitted values From Hearn, Baten and Crayen, age heaping is measured using the Whipple index, an observation is a Whipple Index and illiteracy rate by birth state-census regions (US year states and territories, foreign countries and provinces) with at least 100 observations; IPUMS data. J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 13 / 29
100 200 300 400 Age Heaping in the Long Run Figure 7. Age heaping in the long run 0 300 1300 1400 1500 1600 1700 1800 1900 Italy Germany France Alps Russia United States From Hearn, Notes: Baten Whipple and Index Crayen, values, age combined heaping male isand measured female data; using time the refers Whipple to approximate index birth decade. Sources: Duncan-Jones (1990) pp. 86, 90; Herlihy and Klapisch-Zuber (1978) pp. 656-59; City archive of Balingen, Musterungsliste 1523, A 28a M21; City archive of Lippborg, Catalogus Familiarum... parochiae Libborgensis de dato 20. Martii 1750; IPUMS; Rothenbacher (2002); Kaiser and Engel (1993) pp. 829-33; Census of the Russian Empire, 1897. J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 14 / 29
Age Heaping by Region From Crayen and Baten, age heaping is measured using the Whipple index J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 15 / 29
Human Capital Age heaping over time Location Date Type Group % reporting an age ending in 0 or 5 Rome Roman empire urban rich 58.4 Roman Africa Roman empire both rich 61.6 Carthage Roman empire urban rich 50.4 England 1350 both rich 68.8 Florence, Italy 1427 urban all 45.6 Pistoia, Italy 1427 urban all 53.6 Forentine territory 1427 rural all 62.4 Corfe Castle, England 1790 urban all 26.4 Corfe Castle, England 1795 urban poor 31.2 Adleigh, England 1796 rural all 44 Terling, England 1801 rural poor 35.2 Cotton operative, England 1833 both workers 24.8 J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 16 / 29
Issues with Age Heaping Big advantage of age heaping is that we only need to observe a cross-section of ages, we don t need multiple observations per person Not (at all) a perfect proxy for literacy or education All sorts of reasons to misreport age (may want to seem younger, may want to seem older, etc.) People may not care about age or reporting it accurately Person recording age might not care about recording it accurately J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 17 / 29
Issues with Age Heaping Fraction of individuals.05.1.15.2 0 1 2 3 4 5 6 7 8 9 Last digit of age White females White males Black females Black males Age heaping in the 1880-1930 federal censuses, North Carolinians over the age of 19 J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 18 / 29
Issues with Age Heaping Fraction of individuals 0.05.1.15 0 1 2 3 4 5 6 7 8 9 Last digit of birth year White females White males Black females Black males Age heaping in North Carolina death certificates 1909-1975, individuals over the age of 19 J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 19 / 29
Issues with Age Heaping Fraction of individuals.08.09.1.11.12 0 1 2 3 4 5 6 7 8 9 Last digit of age White females White males Black females Black males Age heaping in the 1880-1930 federal censuses, North Carolinians between 10 and 19 J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 20 / 29
Issues with Age Heaping: An Aside Another interesting issue with age heaping is what people round to We like zeros and fives, but that s in part because we use a base ten system Think about some other types of rounding: Rounding distance to the quarter mile Recipe amounts rounded to quarters and eighths Han Chinese heap on 12-year cycle related to preferred animal years of the Chinese calendar (year of the dragon is particularly popular) Turkic Muslims in China heap on 0 or 5 This is a place where econ history adds to economics J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 21 / 29
Measuring Literacy Rates Can look at volume of records as an indication of overall literacy rates (Clark compares England and India on this basis) Can look at the number of people that can sign or read various types of documents: Percentage of grooms who signed the marriage register Percentage of witnesses who signed their depositions Percentage of witnesses who signed ecclesiastical court declarations Number of people who could read a passage of the Bible (to get out of secular court) J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 22 / 29
Measuring Literacy Rates: Election Season Aside SECTION 260: The income arising from the sixteenth section trust fund, the surplus revenue fund, until it is called for by the United States government, and the funds enumerated in sections 257 and 258 of this Constitution, together with a special annual tax of thirty cents on each one hundred dollars of taxable property in this state,... J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 23 / 29
Measuring Literacy Rates: Election Season Aside...which the legislature shall levy, shall be applied to the support and maintenance of the public schools, and it shall be the duty of the legislature to increase the public school fund from time to time as the necessity therefor and the condition of the treasury and the resources of the state may justify;... J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 24 / 29
Measuring Literacy Rates: Election Season Aside...provided, that nothing herein contained shall be so construed as to authorize the legislature to levy in any one year a greater rate of state taxation for all purposes, including schools, than sixty-five cents on each one hundred dollars worth of taxable property; and provided further, that nothing herein contained shall prevent the legislature from first providing for the payment of the bonded indebtedness of the state and interest thereon out of all the revenue of the state. J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 25 / 29
Measuring Literacy Rates: Election Season Aside SECTION 20: That no person shall be imprisoned for debt. J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 26 / 29
Literacy Now J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 27 / 29
Human Capital J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 28 / 29
Human Capital J. Parman (College of William & Mary) Global Economic History, Spring 2017 February 3, 2017 29 / 29