Published by EH.NET (May 2008)
Timothy J. Hatton, Kevin H. O’Rourke, and Alan M. Taylor, editors, The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson. Cambridge, MA: MIT Press, 2007. ix + 417 pp. $40 (cloth), ISBN: 978-0-262-08361-4.
Reviewed for EH.NET by Dan Bogart, Department of Economics, University of California, Irvine.
It is a testimony to Jeffrey Williamson that so many influential scholars have contributed to a book honoring his career. The list of contributors reads like a ‘who’s who’ in comparative economic history. In the opening chapter, Timothy Hatton, Kevin O’Rourke, and Alan Taylor summarize the ‘the New Comparative Economic History’ and Williamson’s contribution to it. In a nutshell, this line of research analyzes the sources of economic growth, the importance of institutions, and the impact of globalization by making comparisons between actual economies. An illuminating contrast is made with early cliometrics, which addressed questions by constructing counterfactuals with the help of theory and calibration. There is no doubt that comparative research is making contributions to core questions in economic history. As a survey of the chapters reveals, comparative economic historians have an incredible amount of data at their disposal and when combined with modern empirical tools much can be learned. Still there are some problems or challenges that need to be kept in mind. One complication is that much cross-country or cross-regional variation cannot be meaningfully accounted for with standard variables. Another is that few variables can be taken as exogenous in the long-run, making identification quite complicated. Lastly, more theory is needed to understand how economic and political processes evolve over the long run.
The main contribution of the book is to offer a sample of the latest research in comparative economic history. The sample is not random to be sure, but the chapters do cover a wide range of issues ? migration, income convergence (and divergence), inequality, international trade, and international finance ? all of which have been central to Jeffrey Williamson’s research. Most of the contributions are fairly specialized and address a particular issue. William Collins (chapter 7) uses micro-census data from 1940 to 2000 to document that the educational convergence of the southern U.S. was largely driven by the higher education attainment of southern-born children and supplemented by the absorption of high human capital in-migrants. The chapter makes several contributions to the literature on migration and education in the “New South.” Leah Platt Boustan (chapter 11) shows that the nineteenth century migration of Russian Jews to the U.S. can be explained by the U.S. unemployment rate and the stock of the Jewish population in the U.S., while religious violence in Russia had modest long-run effects. Her chapter would be of interest to scholars studying the Jewish Diaspora and the estimation of immigration flows.
Several chapters are devoted to income convergence, divergence, and inequality. Robert Allen (chapter 1) compares real wages in India and Europe over the long-run and finds they were similar until the seventeenth century, when a divergence began, particularly in comparison to England. The chapter offers new insights on the timing of the Great Divergence. Greg Clark (chapter 2) uses a calibrated model of the British economy to argue that population growth accounts for the structural differences between Britain and its European competitors, not the productivity growth associated with the Industrial Revolution. The chapter makes a contribution to recent literature on the formal modeling of the British economy from 1780 to 1860. Leonardo Prados de la Escosura (chapter 12) presents new estimates of inequality and poverty in Latin America since 1850. They show that inequality increased steadily from the late 1800s to the 1970s, while poverty counts declined, largely due to economic growth. This chapter will be of interest to those who study the dynamics of growth, inequality, and poverty over the long-run. George Boyer (chapter 13) shows there was significant convergence in non-income measures of living standards across the Atlantic economy from 1870 to 1930. He argues that improvements in the 3 l’s ? longevity, learning, and leisure ? helped to slow emigration from northwestern Europe to the New World in the 1900s. The results suggest the need for broader measurements of welfare in the first era of globalization. Cormac O Grada (chapter 14) examines the divergence and convergence of welfare measures in Britain and the Netherlands from 1500 to 1850 and Ireland and Italy from 1950 to 2000. The chapter quantifies the higher welfare gains from rapid initial growth followed by slower subsequent growth compared to slow initial growth followed by rapid growth. His chapter makes a contribution to the literature on the welfare consequences of “economic miracles.”
Several more chapters are devoted to commodity market integration, international trade, and protection. Suleyman Ozmucur and Sevket Pamuk (chapter 3) find mixed evidence for commodity market integration across Europe between 1500 and 1800. Tests based on coefficients of variation and cointegration show no evidence of integration for rice, sugar, honey, and butter, and partial support for integration in wheat and olive oil. Their findings have relevance for the “When Did Globalization Begin” debate. Giovanni Federico and Karl Gunnar Persson (chapter 4) revisit the issue of integration in world wheat markets by studying the variance in prices from 1800 to 2000. They find that much of the cross-national variance was due to differences in wheat prices between free-trade and protectionist countries and among protectionist countries. Their findings will be of interest to the growing literature on the determinants of market integration. Kevin O’Rourke and Alan Taylor (chapter 8) provide evidence that in land abundant economies greater democracy raised tariffs, and in labor abundant economies greater democracy lowered tariffs. They also find that in countries with high capital to labor ratios greater democracy lowered tariffs. Their chapter contributes to the literature which confronts historical data with trade and political economy models. Timothy Hatton and Jeff Williamson (chapter 9) investigate why trade was more restricted compared to immigration in the first era of globalization and trade was less restricted compared to immigration in the second era of globalization. They argue that tariffs were a more important revenue source in the nineteenth century than today and that policy backlashes against immigration were more muted in the nineteenth century because of the limited franchise, developmental coalitions, and party politics. Their chapter suggests that the first era of globalization can offer some interesting insights on the modern immigration debate.
Two chapters deal with international comparisons of productivity. Alan Olmstead and Paul Rhode (chapter 5) study how improvements wheat breeding in the nineteenth century prevented yields from significantly declining as production shifted to colder and drier places. Using case studies from several countries, they show how wheat breeding became a global enterprise with an exchange of ideas between every continent. Their analysis emphasizes a somewhat forgotten aspect of the first globalization: international knowledge transfers. Using cross-country regression analysis, Gayle Allard and Peter Lindert (chapter 15) find evidence that employment protection legislation and product market regulation reduced employment and productivity since the 1960s. They also find that coordinated wage setting and welfare state transfers either increased employment and productivity or did little to reduce them. This chapter contributes to the broader literature on the efficacy of Anglo-American institutions versus Continental European institutions.
Finally, there are two chapters analyzing financial markets from a comparative perspective. Richard Grossman (chapter 6) shows that bank capital to asset ratios declined in most countries from 1840 to 1940. Cross-country regression analysis reveals that banking crises increased capital to asset ratios, but government regulations, like minimum capital requirements, had little influence. This chapter shows convergence in a key variable across banking systems, and suggests the benefits of comparative research in banking history. Holger Wolf and Tarik Yousef (chapter 10) examine the timing of exit from the Gold Standard during the Great Depression. They find that greater deflation or recession hastened exit, as did the exit of trading partners. Interestingly, greater political instability slowed exit from the Gold standard. Their results should be of interest to scholars studying the determinants of monetary policy in the Great Depression.
Dan Bogart is an assistant professor of economics at the University of California, Irvine. His research focuses on government policies towards the infrastructure sector in Britain and throughout the world in the eighteenth and nineteenth centuries. Recent publications include “Nationalizations and the Development of Transport Systems: Cross-Country Evidence from Railroad Networks, 1860-1912” (forthcoming, Journal of Economic History); “Turnpike Trusts and Property Income: New Evidence on the Effects of Transport Improvements and Legislation in Eighteenth Century England,” (forthcoming in the Economic History Review); and “Inter-modal Network Externalities and Transport Development: Evidence from Roads, Canals, and Ports during the English Industrial Revolution” (forthcoming in Networks and Spatial Economics).