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Classic Reviews in Economic History

Brinley Thomas, Migration and Economic Growth: A Study of Great Britain and the Atlantic Economy. Cambridge: Cambridge University Press, 1954. 362 pp. (second edition, 1973, xxxi + 498 pp.)

Review Essay by James Foreman-Peck, Department of Economics, Cardiff Business School, Cardiff University.

The Rise and Fall of the Atlantic Economic Community

Brinley Thomas’ (1906-1994) contention that “it is instructive to regard the Atlantic community of nations as one economy” was immensely refreshing for those of us brought up on national economic histories. Interactions with the wider world tended to be downplayed or at least left unexplained in more conventional accounts. Moreover Migration and Economic Growth was not the work simply of a period specialist historian; Thomas was an economist, deploying a massive range of statistics to discover the nineteenth-century world that had been lost after a half century of total war.[1] In the second edition, this world, in many respects rather close to textbook neoclassical economics, provided a fruitful means of interpreting the great boom after 1945, as well.

Unusually by today’s standards, the study begins with a history of nineteenth-century thought about non-competing groups, social mobility and migration. Traditionally trade theory assumed perfect mobility of labor within the national economy, but none between economies. Changes in trade policy and market integration required shifts of employment between sectors within the national economy. Yet in the later nineteenth century, rather than change occupation and sectors, workers would often choose a different country of residence; they were not substitutes or competitors for other types of labor.

Thomas concentrates on class rather than occupational immobility, however. He has a model of secular changes in social structure and mobility (from landless laborer to landowning farmer). This scheme bolsters an argument for national protectionism, when land is owned by residents of a different country. Industrialization brings social stratification and, with a rigid social structure, immigrants are no longer welcome. In a later chapter his “dynamic theory of economic development,” involving increasing U.S. social rigidity as the land filled up over the nineteenth century, is used to explain the switch of British immigration away from the U.S. in the years 1896-1913, when immigration from other destinations was booming.

In Part 2, Thomas discusses his British and U.S. statistical sources. He concludes that changes in the series, if not the levels, can be trusted. Part 3 contains the analysis of the first edition and the second edition includes a Part 4, a reappraisal.

As Thomas’s obituarist and former research assistant makes clear, the structure of the book, and particularly the second edition, is the outcome of an evolutionary process (Lewis 1996). The central idea was published as an article in 1951, and appears as chapter 7 – “Migration and the Rhythm of Economic Growth.” The new edition was strongly influenced by Thomas’s work in the intervening years on urban development and economic growth and on the Welsh economy. The chief revision to the material of the first edition concerns Southern U.S. migration to the North. Thomas also adds chapters taking issue with his critics on the brain drain and on monetary influences, these last two swayed by the very different economic environment of the 1950s and 1960s.

Unlike Schumpeter, Thomas regards international migration as responding to innovations, as well as contributing to fluctuations. He also believes internal or rural-urban migration was a substitute for emigration so that when one was high the other was low. If the same type of people emigrated as migrated internally this is what we would expect — but not if they were non-competing groups.

Thomas’s central theme translates well as a real business cycle. A technology shock in a region raises the productivity of labor there. More capital and labor are supplied (migration) because higher wages match higher productivity; there is a positive correlation of the real wage and the upswing. This contrasts with shorter cycles perhaps based on workers’ misperceptions of prices and the real wage in monetary fluctuations. In the region without the positive shock, less labor and capital are supplied, because better returns are to be had elsewhere. In the booming region, the time necessary for building the infrastructure to take full advantage of the technology means that the flow of labor and capital continues for some years, until marginal returns are equalized again between regions (allowing for non-pecuniary differences and costs of migration), or other shocks occur.

Demographic impulses as well as technology shocks promote the distinctive inverse cycles between the regions. A case in point is the Napoleonic war “baby boomers” that, in due course Thomas maintains, created the “hungry forties.” Malthusian pressure in Europe pushed migrants to the U.S., capital tended to follow them and the demand for housing in the U.S. rose (even though, in contrast to the positive technology shock, real wages in the receiving region fall and those in the transmitting region rise, relative to what they would have been). Non-competing groups add richness to the model. To the extent that the immigrants are complementary to the indigenous work force, wages will rise. More likely is that some wages (say skilled) will rise and others fall – if, for instance, immigrants are unskilled. The more capital that flowed with the migrants the stronger the growth they promoted, and the less adverse the impact on wages.

Today we are more likely to consider Heckscher-Ohlin derived approaches, for example that focus on income distributional consequences of factor flows, or the determinants of skill premia.[2] When transport costs fall, free trade permits a lower price of food in land-scarce countries like Britain and leaves landowners and agricultural laborers worse off. This encourages migration (internal or external) from the rural sector regardless of class mobility, although not regardless of occupational mobility. But Thomas largely ignores trade, as well as product and factor prices.[3]

Part 3 of the second edition concludes with a chapter (12) on the impact of the U.S. immigration restrictions of the 1920s. Thomas observes that the legislation encouraged agricultural protectionism in Europe because redundant population, unable to move to the U.S., was employed growing subsidized crops. Migrants were also diverted to Canada and South America, boosting output there. He contends that the restrictions played an important part in the process that ended in the world depression. But “it is an ill wind that blows nobody any good”; Thomas’s final chapter (18) argues that black migrants from the South gained from the elimination of European competition. In the second edition he notes that white and black internal migration were inverse. The immigration restriction act of 1924 was followed by big increases in southern blacks in the North.[4] Conversely, “What the evidence suggests is that in the sixty years after the end of the Civil War the strong competition of white workers from abroad … set a stern limit to the number of blacks who could obtain employment in the booming urban areas of the North and West, and consequently they suffered relative impoverishment” (p. 333). Jeffrey Williamson (2005) cites later literature to this effect, and discusses the corollary that the position of blacks deteriorated after 1970 because of competition from immigrants.

Thomas’s chapter 16 on migration and British regional growth introduces the wider world to Welsh “exceptionalism.” This thesis allows the possibility of enlivening economic history syllabuses with questions such as “If Ireland had Wales’ coal would New York now conduct a parade on St. David’s rather than St. Patrick’s Day?” In the later nineteenth and early twentieth centuries Wales absorbed immigrants at a rate not much less than the U.S. in the same period. Migration cycles for Wales were inverse to those of Scotland and England; Wales exported coal (measured by tonnage Cardiff was the largest port in the world by 1890), whereas English coal was for domestic consumption.[5] Whereas Ireland lost population absolutely, and Scotland lost natural increase by net migration, Wales gained from net migration and the population almost doubled between 1871 and 1911.

Taking issue with “exceptionalism,” Dudley Baines (1985) has pointed out that the Welsh were more likely to emigrate than the English, and through England (Liverpool boasted the first real Welsh-language newspaper). He contends that the U.S. returns of the 1880s almost certainly classified the Welsh as English, and that internal migration does not seem to have been a substitute for emigration. Wales actually experienced a massive influx of English and others. In the 1870s and 1880s they may well have been assimilated, for the numbers of Welsh speakers rose in every decade to 1911, when there were more than a million (Davies 1994). But in the two decades before the First World War, foreign arrivals were too numerous to be absorbed culturally.

Omitted from the second edition is a discussion of the wider consequences of the interwar regime shift for the “Atlantic community.” In Chapter 14 (“The Atlantic Economy, Old and New”) of the first edition, the focus is on the disruption of factor flows and the role of government transfers within national economies. The labor and capital movements, that allowed adjustment of “regional” economies despite the apparently irrevocable linking of exchange rates through the gold standard, and compensatory public spending, are suggestive of the later optimum currency area literature.

Pursuing the greater role of government, Thomas analyzes the “brain drain” in the years after 1945 in chapter 17 of the second edition. Highly skilled labor migrated from poorer economies (often where they were trained at public expense) to richer countries. In the U.S. Brinley explains the phenomenon by the massive expansion of government expenditure, particularly research and development spending, together with inelasticity of skilled labor supply. In Britain by contrast, immigration of highly skilled personnel merely offset emigration to the U.S. and elsewhere.

How much further has half a century of analysis and data construction taken us? General equilibrium modeling and econometric estimation have certainly added precision both to the questions and the answers. But Thomas’s book continues to be worth reading thanks to his ability to identify and analyze empirically a range of important problems over 120 years or more of the Atlantic economy.

Notes: 1. I met Thomas in California in the early 1980s when I believe he was in demand to entertain the All-California group of economic historians with after dinner speeches. Among other nuggets he offered me was the optimum quantity of money to carry if obliged to walk in Berkeley after dark (as he was sometimes). He estimated that two 20 dollar bills were sufficient to avoid being beaten up by frustrated muggers, while not imposing an intolerable burden on the budget. I am unsure as to whether this doctrine was ever tested.

2. Jeffrey Williamson and collaborators (for example Hatton and Williamson 1998, and O’Rourke and Williamson 1999) have been particularly influential in this respect.

3. The neglect of Ohlin’s (1933) book is presumably because it was nominally about trade while Thomas was interested in factor mobility.

4. Subsequently Hatton and Williamson (2006) constructed a counterfactual immigration rate and level in the absence of the legislation, showing that it accounted for about half of the reduction in labor supply and therefore for even more of the decline in unskilled labor force growth.

5. Lewis (1960) analyzes a helpful model of such an export economy, in which today “coal” would probably be replaced by “tradable goods” and “building” by “non-tradable (capital) goods.”

References:

Baines, Dudley. 1985. Migration in a Mature Economy: Emigration and Internal Migration in England and Wales, 1861-1900. Cambridge: Cambridge University Press.

Davies, John. 1994. A History of Wales. London: Penguin.

Hatton, Timothy J. and Jeffrey G. Williamson. 1998. The Age of Mass Migration: Causes and Economic Impact, New York: Oxford University Press.

Hatton, Timothy J. and Jeffrey G. Williamson. 2006. Global Migration and the World Economy: Two Centuries of Policy and Performance. Cambridge, MA; MIT Press.

Lewis, J. Parry. 1960. “Building Cycles: A Regional Model and Its National Setting,” Economic Journal 70 (September): 519-35.

Lewis, J. Parry. 1996. “Brinley Thomas, C.B.E., M.A., Ph.D., F.B.A.: Formerly Fellow of the University of Wales,” Economic Journal 106 (July): 984-93

Ohlin, Bertil G. 1933. Interregional and International Trade. Cambridge, MA: Harvard University Press.

O’Rourke, Kevin H. and Jeffrey G. Williamson. 1999. Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy. Cambridge, MA: MIT Press.

Williamson, Jeffrey G. 2005. The Political Economy of World Mass Migration: Comparing Two Global Centuries. Washington, DC: American Enterprise Institute.

Director of the Welsh Institute for Research in Economics and Development and former President of the European Historical Economics Society, James Foreman-Peck has been Economic Adviser at H.M. Treasury concerned with micro-economic policy issues, particularly public service delivery and procurement. Other previous posts include Professor of Economic History at the University of Hull, Visiting Associate Professor of Economics at the University of California, Davis, and Fellow of St Antony’s College, University of Oxford. His books include A History of the World Economy: International Economic Relations since 1850, Public and Private Ownership of British Industry 1820-1990 (with R. Millward) and European Industrial Policy: The Twentieth Century Experience (edited with G. Federico).