In the past decade, Robert Allen’s method of calculating ‘welfare ratios’ – that show whether one man’s wage could purchase sufficient consumption baskets for himself, his wife, and two children – has been adopted by scholars researching historical living standards in various parts of the world. This method is ... (Show more)
In the past decade, Robert Allen’s method of calculating ‘welfare ratios’ – that show whether one man’s wage could purchase sufficient consumption baskets for himself, his wife, and two children – has been adopted by scholars researching historical living standards in various parts of the world. This method is worthwhile because it enables them to “maintain the international comparability and temporal consistency of [...] real wage series.” Indeed, thanks to this method, we now better understand the world-wide development of living standards and inequality during the past four centuries. This method has nevertheless been criticized because, among other problems, it is built on unrealistic assumptions about family size. For instance, nineteenth-century English families were usually much larger than Allen assumes. Therefore, additional research on the relationship between family size and real wages is necessary to better understand historical household living standards.
This paper calculates the welfare ratio’s of Dutch rural and urban households during the nineteenth century, accounting for changes in household size and consumption during the life-cycle. It shows that welfare ratio’s – based on one man’s wage as the sole source of income – of most households dropped below the subsistence level when there were multiple children present. This was especially true in rural regions where wages were relatively low. Therefore, during the major part of their life-cycle, households were likely to generate other types of income next to the husband’s wage such as women’s and children’s wage labour or subsistence agriculture. This paper further calculates alternative welfare ratio’s by calculating the absolute and relative values of these additional incomes.
Allen, R. C., Bassino, J.-P., Ma, D., Moll-Murata, C. and van Zanden, J. L., 'Wages, Prices and Living Standards in China, 1738-1925: in Comparison with Europe, Japan, and India', Economic History Review 64, no. 1 (2011), pp. 8-38.
Frankema, E. and van Waijenburg, M., 'Structural Impediments to African Growth? New Evidence from Real Wages in British Africa, 1880-1965', Journal of Economic History 72, no. 4 (2012), pp. 895-926.
Humphries, J., 'The Lure of Aggregates and the Pitfalls of the Patriarchal Perspective: A Critique of the High Wage Economy Interpretation of the British Industrial Revolution', Economic History Review 66, no. 3 (2013), pp. 693-714.
Schneider, E. B., 'Real Wages and the Family: Adjusting Real Wages to Changing Demography in Pre-Modern England', Explorations in Economic History 50, no. 1 (2013), pp. 99-115. (Show less)