William J. Collins, Harvard University

Improvements in both internal and external transportation had a dramatic impact on the Indian economy in the second half of the 19th century. This paper examines the potential labor market impact of these integrating forces by using district-level nominal wage and price data to document regional real wages from 1873 to 1906. Although initially low-paying districts tended to have more wage growth than initially high-paying districts (beta convergence), the overall dispersion of wages did not decline (sigma convergence). The prevalence of large and frequent shocks to the agricultural sector helps to explain the persistence of the overall wage dispersion. Relative price changes, which might have benefited regions specialized in the production of particular goods, do not appear to have been a source of wage divergence. The results help put into perspective the relative strengths of the forces acting on the Indian economy.