American Economic Association

The Economic Impact of the Famine in the Short and Long Run
Author(s): Kevin O'Rourke
Source: The American Economic Review, Vol. 84, No. 2, Papers and Proceedings of the
Hundred and Sixth Annual Meeting of the American Economic Association (May, 1994), pp.
309-313
Published by: American Economic Association
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 The Economic Impactof the Famine in the Short
and Long Run
By KEVIN O RoURKE*
The Irishfamineof 1845-1849 stands out
as one of the great disasters of the 19th
century:the last major famine in Western
Europeanhistory,occurringin the backyard
of the then dominantworld power. Excess
mortalityamountedto roughlyone million,
or over one-ninth of the population: on
these scales, the disaster ranked with the
Bengali famine of 1943-1944. Irish emigra-
tion was greatlyincreased,leaving its mark
on the economies and societies of the New
World.
Moreover,this famine had permanentef-
fects. The role of the potato was radically
diminished.A half centuryof risingpopula-
tion prior to 1841 was followed by a fall in
populationwhichpersistedup to the 1960's.
The structure of agriculturechanged dra-
matically,with the share of crops falling
from55.5 percentbefore the famine,to 36.4
percent a decade later, to only 12.5 percent
at the startof this century.Irelandhad been
a net exporter of grain until the Famine,
when it became a large net importer, an-
other permanentchange.
Joel Mokyr(1981) found that the potato
had an importantinfluence on pre-Famine
population trends, "revisionist"claims to
the contrarynotwithstanding.Similarly,in
an earlier paper (O'Rourke, 1991a) I ar-
gued that the Famine had a lasting impact
on post-Famine Ireland, again contraryto
some revisionists.The claim that even if the
Famine had not occurred, international
commodity price shocks would have led
farmersto switchfromlabor-intensivetillage
to land-intensive pasture, significantlyre-
* Department of Economics,
University College
Dublin, Belfield, Dublin 4, Ireland. I am grateful to
Cormac0 Gradaand Peter Solar for encouragement
and advice.
309
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ducingIrish agriculturalemployment,is not
supportedby the evidence.
Surelythe Famineinfluencedthe long-run
evolution of the economy; the question is
how?
I. The Short-RunImpactof the Famine
Potatoes were the linchpin of the pre-
Famine economy.Their function as a wage
good is well known;but potatoes were also
fed to animals and played a crucial role in
crop rotations.A majorform of savingcon-
sisted of feeding potatoes to pigs, which
were sold in the summermonths when the
potato crop of the previous autumn had
been exhausted.Blight hit Ireland in 1845,
partially destroying the potato crop. The
crop was completely destroyed in 1846. In
consequenceveryfew potatoeswere planted
in 1847, a year when the blight was absent.
This encouraged more potato-growingin
1848,when, however,the blightstruckagain.
The result was that Ireland was largely
without potatoes for four years. How did
the economyrespond?
Available agriculturalstatistics show the
collapse in potato cultivation during the
famine, as well as its gradualrecoveryafter-
wards. The potato acreage never got close
to its pre-Famine level, however (Austin
Bourke, 1993 Ch. 11). Pig and poultrynum-
bers also collapsed, and the numbers of
sheep declined, as peasants consumedtheir
capital. Initially the area under grains in-
creased, as farmers substituted away from
the potato; the wheat acreage soon started
to fall back, however.
The statisticsalso show a continualrise in
the numbers of cattle, both during the
Famine and afterwards.The Famine clearly
had dramaticshort-runeffects on the Irish
economy. More interesting, maybe, is the
fact that once the Faminehad run its course.
310 AEA PAPERS AND PROCEEDINGS MAY 1994

and the economy had settled into a new TABLE 1-CGE RESULTS (PERCENTAGE CHANGES)

equilibrium,the structureof the economy Shock P T S w d L

had changed significantly.The potato never
recovered its pre-Famine position. By the Rybczynski -3 -17 -15 + 22 -13 - 29
mid-1850's, wheat production was signifi- Yield -9 -7 -10 0 - 1 +9
Wage good -11 - 20 - 26 + 20 -15 - 22
cantly down from pre-Famine levels, and Diet - 1 +6 - 42 +2 -11 -12
cattle numberswere significantlyup. Rela- Allshocks +36 -42 -45 0 + 23 -32
tive to their pre-Faminelevels, tillage out- Actual +31 -21 - 75 + 45 - -29
put was down 21.3 percent, potato output
Notes: P = pasture-sector output; T = tillage-sector
was down 75 percent, and the volume of output; S= potatoes; w = wage; d = return to land;
animalproductswas up 30.8 percent. L = agricultural employment.
An obviousexplanationfor this would be
that relativeprice changescaused the shifts
in production.However,output movements
had alreadylargelytaken place by 1854, as
Cormac 0 Grada (1993) has shown; but straw, hay, and manure. There are four
relativeprices did not startto move strongly factors of production:labor, capital, land,
againsttillage until 1856. If the Faminewas and "expertise,"the returnsto which repre-
at least partly responsible,what were the sent the income received by tenants in ex-
mechanismsat work? cess of their wage income. Standardcom-
One obvious possibility, raised by petitive assumptions are made, with two
O Grada (1989), is that the Irish potato, exceptions(designedto capturethe peculiar
which has already (mistakenly)given text- flavor of the pre-Famine Irish economy).
books their example of a Giffen good, may Workers and farmers consume a fixed
also have provokeda classic exampleof the amountof potatoes per capita;and in most
Rybczynskitheorem in action. Did the fall runs, wages are exogenous and linked to
in Ireland'slaborendowment,causedby the potato prices, with employmentthen being
Famine, lead to the contraction of labor- endogenous.
intensive tillage and the expansionof land- The model attempts to incorporate as
intensivepasture?The problem,as 0 Grada many features of the real world as possible
notes, is that the ceteris paribusconditions and is thus more general than the 2 x 2
of theory were no more present on this model of the Rybczynskitheory. For exam-
occasion than they ever were. Declining ple, the model incorporatesa third, non-
potato yields, and (by the late 1850's)chang- traded, sector. Whether a reductionin the
ing relative prices, might also have led to endowmentof labor in such a model leads
the output movementsobserved. to the output responses predicted by
It is therefore necessaryto ask the coun- Rybczynskiin the contextof the 2 x 2 model
terfactualquestion,"Whatwould have been is a purelyempiricalissue. Agriculturalem-
the impactof a decliningpopulationon the ployment fell by 29 percent between 1841
Irish economy, in the absence of other ex- and 1856. If one imposes this shock on the
ogenous shocks?"Computablegeneralequi- pre-Faminemodel (letting wages adjusten-
librium(CGE) models are of course ideally dogenously, of course), the result is that
suited to ask such questions. In O'Rourke tillage output contractsby 17 percent, and
(1991a), I constructed such a model, cali- potato production by 15 percent, in line
brated to pre-Faminedata. There are three with the predictions of the theorem (see
sectors in the model: tillage, pasture, and Table 1). However, pastoral-productspro-
potatoes. The outputs of the first two sec- duction also contracts, although only by 3
tors (cereals and animal products) are percent. It thus appearsthat the decline in
traded, and their prices are exogenous. population caused by the Famine can ex-
Potatoes are nontraded. In addition the plain a lot of the decline in tillage, as well
model incorporatesother largelyintermedi- as some of the increase in the share of
ate productsproducedby the three sectors: animal products in agriculturaloutput. It

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VOL. 84 NO. 2 ECONOMIC IMPACT OF THE GREAT IRISH FAMINE 311

cannot, however, on its own explain the changed?"The "yield" run in Table 1 re-
increase in animal husbandry,nor the dra- duces pre-Faminepotato productivityby 25
matic fall in potato production. percent, a reasonable estimate. Nominal
wages are held constant, to abstract from
II. The Long-Run Impact of the Famine the wage-goodeffect mentionedabove. The
results are surprisingbut easily explained.
In any event, the Rybczynskitheorem Pre-Famine diets were overwhelmingly
would be incapable of answeringa further potato-based,and the model thus incorpo-
question:why did the Irish population,and rates no substitutionbetween potatoes and
therefore the structureof Irish agriculture, other goods. If farmers and their workers
not reverteventuallyto pre-Faminemodes? had continued to eat potatoes in the same
Did the Famine in some way permanently amounts, potato output would only have
alter the structureof the Irish economy? declined a little. More resourceswould have
As indicatedearlier,potatoes were at the had to be devoted to potato cultivationthan
heart of the pre-Famine rural economy. before, outputs of other sectors would have
Blightbecame a semi-permanentfixtureun- had to contract, and overall employment
til the end of the century, when effective would have risen. (Since potatoes were non-
treatmentswere found. Peter Solar (1989) traded, this would have involved a multi-
estimates that net potato yields per acre plier effect of sorts.)
afterthe Faminewere 38-percentlowerthan The effects on productionof coursewould
before 1845.It is difficultto separateempir- have been even more negativeif wages had
ically the exogenous fall in yields from de- risen in line with increasedpotato prices, as
clining labor intensity, especially since the McGregor suggests. The "wage-good"run
former, by raising the price of the wage in Table 1 shows that employmentwould
good, would have inducedthe latter. Never- have fallen, and production in all agricul-
theless, that potato yields did permanently tural sectors would have dropped.With the
fall in the wake of the Famine is not in potato as wage good, reduced potato yields
dispute. reducedthe productivityof Irish agriculture
Patrick McGregor (1984) argues that in as a whole. In the absence of other change,
the short run this would have led to higher there would have been across-the-board
wages, less employment,and a switch from decline.
tillage to pasture. This wage effect might Clearlysuch an outcomewould have been
have applied in the very short run (a few unsustainable:somethinghad to give. Diets
months,say), but it is more likelythat farm- certainly did: per capita consumption of
ers were constrainedby a shortageof labor potatoes fell by two-fifthsbetween the early
as the Famine progressed(as in the previ- 1840's and late 1850's. Allowing consump-
ous section), rather than by an increase in tion per capita to fall as it actuallydid and
the subsistence wage. Eventually workers correspondinglyreducingthe role of potato
would have shifted to cereals consumption, prices in determiningwages, I get the "diet"
which would have cut the link between results in Table 1. Potato productionnow
potatoes and wages. In the longer run, contractsby substantiallymore than the de-
dearerpotatoeswould presumablyalso have cline in productivity,as expected, releasing
led to less intensive agriculture,with ani- enough resourcesso that tillage can expand
mals eating fewer potatoes. a little. Notice that decliningpotato yields
CGE models are of course unsuited to on their own do not seem to be able to
examiningstructuralchange. However,they explain the post-Famineswitch from tillage
are good at disentanglingthe separate ef- to pasture. This is reasonable;so far, I am
fects of differentbut closely related shocks keeping pre-Famine agriculturalstructures
through counterfactualanalysis.For exam- intact and merely changingpotato produc-
ple, one could ask: "Whatwould have been tivity, diets, and wages. The main result of
the effects on the Irish economy if potato this shouldindeed be a contractionof potato
yields had declined, and nothing else production;an expansionof tillage, similar

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312 AEA PAPERS AND PROCEEDINGS
in terms of factor proportions, would be
reasonableunder the circumstances.
Somethingmore radicalhad to happen to
produce the dramatic output shifts docu-
mented earlier, in particularthe move to
extensive farmingmentioned above. Given
informationon what cattle and pigs were
stall-fed before and after the Famine, one
can ask: "How would the pre-Famineecon-
omy have responded if potato yields and
potato consumptionhad fallen as they actu-
ally did, animalshad been fed at their post-
Famine rates, and nothing else had
changed?" The results are given as "all
shocks" in Table 1. Pasture now expands
dramatically,while tillage contracts. The
reason is obviousenough:less intensiveani-
mal husbandryinvolved fewer inputs and
was more profitablefor landowners.(Com-
pare the returns to land in the all-shocks
run with those in other runs.)
Surprisingly,these three shocks(to potato
yields, consumption, and animal feeding)
combine to produce movementsin outputs
and total employmentreasonablyclose to
those actually observed (given in the last
row of Table 1). The model's assumptionof
subsistencewages does not, however,square
with the observedwage increase of 45 per-
cent (see the next section). (The all-shocks
run does link wages to potato prices; how-
ever, the net effect of the yield, diet, and
animal-feedingshocks on potato prices is
negligible.) Moreover,while I do not have
accurate data on other factor prices, rents
probably fell over the period, presumably
due to the increase in wages. To repeat,
CGE models cannotby their naturebe used
to investigate structural change; it is the
similarities between the last two rows of
the table, not the differences, which are
remarkable.
Extensivefarmingfavoredlandownersbut
led to diminished employment opportuni-
ties. The permanent nature of the blight
necessitateda switchawayfrom old farming
styles. The possibilitythat the Famine also
providedfarmswith the opportunityfor such
a switchcannotbe discounted,for of course
if extensive farming was their most prof-
itableoption, one must ask why they did not
switch sooner. From the perspectives of
landlordsand farmers,the Famine cleared
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MAY1994
large tracts of land of the smallholdings
which made large-scale grazing difficult.
Viewed in this light, the Famineservedas a
sort of speeded-up enclosure movement.
While the data for the 1840'sare poor, and
a lot more econometricwork has to be done
on the post-Faminedata, the degree of cor-
relation across counties (duringthe 1850's)
amongincreasesin cattle numbers,declines
in population,and increasesin the percent-
age of farm holdingsover 30 acres, is suffi-
ciently strong to keep this hypothesisfirmly
on the agendasof Irish economichistorians.
III. The Famine and Irish Labor Markets
The contrast in Table 1 between the ac-
tual wage increaseafter the Famineand the
static nominal wages predicted by the pre-
Famine model has alreadybeen noted. The
pre-Famine economy was characterizedby
subsistencewages, linked to potato prices,
and the model assumes this. The Famine
completelyaltered the structureof the Irish
labor market,however. By forciblydisplac-
ing so many Irish men and women, it sev-
ered the ties between subsistencecosts and
wages, generatinglinksbetween Irelandand
the rest of the world which ensured that
foreign labor-marketconditionswould have
a far greater impact on Irish labor costs
than the Irish potato.
All the available evidence (George R.
Boyer et al., 1994; Jeffrey G. Williamson,
1994) show Irish real wages catching up
with U.S. and British real wages after the
Famine. Moreover,those wage data which
span the pre-Famineand post-Famineperi-
ods show a clear break:no catchingup, or
even fallingbehind, before the Famine,and
strong catching up afterwards.This makes
sense. Before the Famine, potential emi-
grants might have been constrained by a
lack of money, contacts,or information;af-
ter the Famine, relativesand friends in the
United States or elsewhere could make all
of these available. One substantial shock
was enough to send Ireland down a road
leading to complete integrationwith world
labor markets. Given hysteresis, history
matters:the Famine is crucialto an under-
standing of subsequent Irish demographic
development.
VOL. 84 NO. 2 ECONOMIC IMPACT OF THE GREAT IRISH FAMINE
In turn, the integration of international
labor markets had a substantialimpact on
the post-Famine Irish economy. Using a
CGE model calibratedto post-Faminedata,
I have argued(O'Rourke, 1991b)that post-
Famine emigrationis best understood as a
"pull" phenomenon, with emigrantsbeing
lured abroad by higher wages. This con-
trastswith Marx'sview of destituteworkers
being pushed off the land as a result of a
switch from tillage to pasture. In a similar
vein, Timothy J. Hatton and Williamson
(1993)found that post-FamineIrish emigra-
tion was well explainedby relativewages in
Irelandand overseas.
What was the long-runimpactof emigra-
tion on Irish living standards?In the con-
text of a standard, constant-returnsCGE
model, Boyer et al. (1994) find, not surpris-
ingly, that the answer depends cruciallyon
the extent to which capitalwas internation-
ally mobile. If capitalwas completelyimmo-
bile, and there had been no post-Famine
emigration,Irish per capita iincomewould
have been 13-25-percentlower in 1908than
it actuallywas. If capital was perfectlymo-
bile internationally,no emigration would
have meant substantialcapital inflows, and
per capita income would only have been
5-9-percent lower than it actuallywas. In-
creasingthe range of uncertaintyis the pos-
sibility that brain drains, or other malign
forces,mighthave led to emigrationactually
hurtingthe Irish economy.
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Lilliput, 1993.
Boyer, George R.; Hatton, Timothy J. and
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O'Rourke, Kevin. "Emigration and Eco-
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Timothy J. Hatton and Jeffrey G.
Williamson, eds., International migration
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