FIRST LECTURE: INTRODUCTION TO ECONOMIC HISTORY

Population dynamic: the olden days (typically before 1920) the families are characterized by large
number of children and low female LFP, instead during the recent years (from 1970 to now) the ones are
composed by low number of children and “high” female LFP.

The demographic transition: we observe a negative correlation between the fertility rate and the
female LFP index, we can state the education is an important variable to decide the number of children.
Moreover, the number of latter is negative correlated with the “life quality” of children (we consider the
enrolment rate).

Two fundamental questions about ECOHIST: 1) Why isn’t the whole world developed? And 2) When
and how did the rich get rich? About the 2) we know that before the agriculture revolution there wasn’t
economic growth.

Economic growth: it’s an increase in the value of output per person, typically measured annually or
often quarterly, usually it’s corrected for inflation (real GDP per capita). When did it start? We can affirm
that from 1800, with the First Industrial Revolution, we observe consistent economic growth in some rich
countries (we refer to the so-called great divergence). Before 1800 all countries faced the Malthusian trap
(no economic growth and £/hour was 1£ from 1600 to 1800).
SECOND LECTURE: WOMEN’S WORK with Giulia Mancini

Definition of Gender: we consider several aspects [sex: biological differences; gender: social and culture
differences; or more philosophical: gender is the social organization of sexual differences].

Gender is important because economics historians, and more in general economist spend low time about
gender impact on economic system. The Gender is important because women’s roles, constraints,

preferences, behaviours, outcomes are different than those of men. Ignoring this fact could lead to wrong/
incomplete results.

Gender study analysis emerges in 1950-60 because of historical change in labour markets women

join massively labour force. From this historic point, the economists/ economics historians started to
consider the women economic role into theories.

Study the female economic situation is important for different motivations:

 Implications for women’s lives. Paid work is linked to economic independence, agency,

bargaining power within family.

 Implications for society. What we know about the size and structure of the workforce

informs our understanding of big economic and social processes, e.g., economic growth

(When and why, it took place).

The structural economic change referred to female situation started during the past century, in order to
understand the drivers of this change we consider the most widespread indicator of labour participation:
the LPI (labour participation index).

The LPI is the share of population that is economically active: employed or unemployed. In the past,
we used the so-called “gainful worker”: share of the population who declared to have an occupation.

When considering historical data, typically, we incur in several problems:

 the Historical population censuses are known to undercount female work.

 Activities we would classify as work today (family farm work, manufacturing work at home,
boardinghouse-keeping) were common for women but often not listed as “gainful work”.
 Social expectations. Even when men and women performed similar activities, these could
be classified as an “occupation” for men but not for women.

Typically, when we analyse the female-LPI over time we observe a U-SHAPE pattern. So, in the past of
today’s high-income countries, women’s (paid) work declined for decades, before rising in the second part
of the 20th century, and the same pattern could be observed in countries with different income level. To
respond to this phenomenon, we divide the LPI pattern in four segments:

 The pre-industrial phase [18th century/19th in Italy]: in this phase the agriculture is prevalent at
household level. Women and men (and children) all take part in productive activities, although with
different tasks. Women’s time in the home is valuable: large families, heavy burden of household
and care tasks.
 The industrial phase [19th century]: we observe a Structural change the agriculture shrinks, industry
grows, locus of production moves out of home (first industrial conglomerates started to be born).
Then, wages are higher than in the past, but not for work performed by women because of Low
 skills (education), Stigma against blue-collar work for married women (social norms) and Burden of
household and care tasks still large. Moreover, a “Male breadwinner “model was predominant.
 The “evolutionary” phase [1960-1980]: we observe a rise of tertiary sector (structural change),
availability of part-time work reduce stigma against female work. The expansion in secondary
education provides female workforce with skills. Instead, there was a decreasing in fertility rate
that reduced burden of household and care task. In this phase, we observe a rapid increase in LFP is
due to married women joining labour force and staying there.
 The “revolutionary” phase [1970 to now]: in this phase, there is a substantial equality in
opportunity and in economic rules. LFP stops being so informative, we should consider other
indicators as wage gap, gap in higher education and so on.

Observing the evolutionary and revolutionary phase we can define a negative relationship between LPI and
Fertility rate.

However, LPI presents many shortcomings if applied to past societies because: LFP does not include
production for own use, LFP is blind to changes in work intensity, LFP assumes a continuity of employment
that didn’t exist in the past. We must consider other indicators as time worked and tasks perfomed.

Gender has been discovered by economic history, but the inclusion of women into the narrative requires a
continuous, deliberate effort. Without women, reconstructions of the past are incomplete... and they may
also be incorrect. Integration of women within the mainstream of economic history may have revolutionary
results.
THIRD LECTURE: WHAT’S THE ROLE OF ECONOMIC HISTORY IN ECONOMICS?

Definition of CLIO: Clio was the muse of history, more specifically, in economics Clio means
Cliometrics (the new economic history). It consists in systematic study of history using theory, stats and
math. In this way, it quantifies the historical facts in order to help quantifying hypothesis.

Why is important study the history? The key goal is to advise policy makers on how to achieve
economic growth. In particular, it’s important the dilemma of context and external validity because the key
problem is that scholars can rarely make controlled experiments, often it’s very difficult to account for
time-specific circumstances.

Other issues: 1) persistent studies (risk of compressing history); 2) whig history (awareness that
history is circumstantial); 3) conflict of interest (knowing that academics might bend truth).

About persistent studies: the events of present could be correlated with the past events (the role of
geography). Typically, of economists, instead economist historians perform mechanism studies (why from
past to present).

Whig history: Whig history warns that the answer could be circumstantial. It’s an important concept
because, frequently scholars interpret the history as the inevitable victory of progress, for example it’s
sufficient copy the winners (typically are western countries) to achieve the success. It’s not correct because
we don’t consider the eventual structural problems of winner which could lead to future problem, often
policy makers don’t learn from the past (Great Depression of 1920 and Great Recession of 2008).

Conflict of interest: for instance, the economists/ economic historians are under pressures of local
Authority, so they hide the truth).
5th LECTURE: how deep are the roots of economic development? + LEGGERE PAPER
Insights: energy and financial crises

Hydroelectric plants incentive the creation of firms near the plant. The South of Italy didn’t invest in renewable energy during
1911. It represents a great difference between North and South municipalities.

From 1910 to 1960 the economic growth was paid by fossil fuels (roughly 90%) due to open trade to fossil fuels during the second
Industrial revolution, the result was the increase of energy dependency from abroad. With actual energy crisis the Italian
Authority has decide to invest in what Italy has locally (focus on renewable energies).

Regarding the roots of development, the answers given by scholars are different:

Decades ago: Solow-growth theory was dominant, stating that economic growth is driven by capital
accumulation (K/L) and exogenous innovation.

Later: models of endogenous growth were developed (AK model).

Recently: the quality of institutions and geography conditions are important

Ongoing: human traits matter?

Geography matter hypothesis:

High correlation between geography and income per capita due to, for instance, climate and temperature;
diseases; presence of natural resources (First Industrial Revolution: coal in UK); Transportation conditions.
So, the actual level of income could be determined millions of years ago.

In according to this hypothesis, Diamond affirmed that Europeans decided to colonise African States
because of Geography conditions (i.e natural resource).

Then, we consider the Diamond Hypothesis. He claims that:

 Biodiversity and East-West space are fundamental to spread the agriculture;

 Agriculture in turn prompts population concentration and Population concentration central to
economic development.

At empirical level the population density in 1500 is correlated with Diamond’s factors (R^2 of 0.44).

But AJR (reversal of fortune) state that positive effect of geography in 1500 could be a handicap
later. So, geography has indirect effects and non-geography factors are important.

For example, Franck and Galor (Flowers of evil) said that Industrialisation not necessarily conducive
for long-run development because:

 Led to persistent use of unskilled-labour-intensive technology;

 Reduced the incentive to adopt skill-intensive technology;
 Detrimental to long-run human capital formation.

So, the roots are wealth are the factors in industrialization, not industrialization itself. Synthetically, who
invest in primitive technology could be trapped in low-tech situation and don’t invest in advanced
technology, and geography isn’t the unique variable able to explain economic development.

In addition, Ridolfi et al (Retarding geography) said that Traditional geographical advantages might
prevent technology adoption, for instance France Industry Sector was lagged compared to England because
the first depend on water mills and water-powered industry were reluctant to adopt steam-technology. As
result Water-rich regions lost out economically to coal-rich ones (France vs Italy).
 Considering other contributions, geography still matters nevertheless cultural transmission might
slow down compensating effect because: Historical conditions tend to persist (‘persistence studies’);
Political, institutional, and cultural influences might prolong persistence and after 1500 became relevant.
Putterman and Weil (QJE 2010): ancestral train matter more than geography (FUCK).

ROLE OF EUROPEANS

Spolaore and Wacziarg said that Human or cultural traits can both prevent and promote growth because
Intergenerational cultural transfers may obstruct progress (religion might be a barrier for technology
innovation), they can persist for millennia or centuries, and the Effects may spread with the diffusion of
cultural traits. In particular the spread of Christianity didn’t promote the innovation technology contrary to
Calvinist movement.

Becker and Woessmann affirmed protestant are more prosperous than catholic because of
protestant ethics (saving and hard work) affect positively the Human Capital Accumulation. In addition,
Squicciarini stated Catholicism has obstruct the adoption of technical curriculum at academic level.

Summary History important for differences in income per person today, even further including geography
(non- manmade history), then, cultural change can diminish the gap between rich and poor and human
traits are deeply ingrained into human behaviour.
6th LECTURE (guest lecture): FINANCIAL ISSUE IN XIX CENTURY with Mauro Rota

From 1860 to 1880 a rapid grow of export due to construction of common payment system (i.e gold
standard).

Source of international trade:

 Communication and transportation cost reduced.

 Increasing global demand due to spread of industrialization.
 Free trade policies
 COMMUNICATION AND TRANSPORTATION COST

The reduction is the effect of domestic market integration, foreign market integration, development of
railways-canal-roads, steam engine applied to shipping and telegraph.

 IMPACT OF TARIFFS

In 1846 the “corn laws” was abolished and free trade policies were established between 1850 and 1860,
other important event was the Cobden-Chevalier Treaty with the so-called “most favoured customer
clause”. It was a treaty between France and UK to reduce the tariff. If one country signs a new agreement
with another country with lower tariff, automatically the new agreement is applied to original agreement.
With this treaty was introduced, for the first time, the concept of cooperation and integration.

After a first period of decreasing tariffs, from the last quarter of XIX century they began to increase because
of:

 Political reasons: rise of nationalism

 Agrarian crisis in Europe
 Lobbying activities
 Neo-mercantilism emerged

The last quarter of XIX century was a period where USA faced a civil war, as consequence there is no
competition of US goods into European market.

 EFFECTS OF TRADE INTEGRATION

 International division of labour  lower wages?
 Reduction in production costs, means better allocation and comparative advantages
 Technology diffusions through the export of capital goods
 Cooperation
 CAPITAL MOVEMENTS IN EUROPE (CM)

Increasing in capital movement. About Great Britain, only the 5% capital was invested in Europa, the rest
was destinated to colonies or countries where legal system was close to one of UK.

When we speak about CM, the LUCA’S PARADOX assumes a particular importance because, the paradox
explains that capital goes where its marginal returns are higher (from rich to poor countries). It’s not true
during the first and second globalization, in this case institutions matter.

The determinant of capital movements:

 Domestic factors (push theories)

 External factors (pull theories)
o Natural resources
o Human capital
 Institutions
 o Property rights (e.g empire effects)
o Gold Standard
 GOLD STANDARD (GS)

The gold standard was a monetary system based on the convertibility of the currency into gold, the
conversion is at a fixed ration with gold, as consequences two currencies with a fixed ration with gold had a
fixed exchange rate between them.

Reasons of gold standard: homogenization of economic transaction and maintain political power

The gold standard was adopted in UK around 1820, the system progressively was extended to other
countries (covered the 87% (roughly) of total transaction) at the end of 19 th century.

Regarding the functioning of Gold System: Fixed parities implied that imbalances of balance of payments
were rebalanced through changes in the domestic gold reserves. In addition, the external rebalancing
mechanism passed through a rebalancing of the internal circulation.

For example, a country in deficit had to reduce internal circulation by adopting restrictive policies

DEBATE ABOUT GOLD STANDARD

Drawbacks linked to GS:

 Inflow of gold: no money adjustment needed

 Outflow of gold: necessary to increase the interest rate, amplifying the pre-existent negative
effects. We can say that outflow gold is a syndrome of negative economic performance
 Tendency to promote restrictive monetary and fiscal policies
 Dumping of the burden of the adjustment mechanism on countries with strong imbalances
 Need of central banking cooperation
 GS amplified the effect of financial crisis of 1929
7th LECTURE: GEOGRAPHY AND GROWTH

Fundamental question: what explains comparative development?

Henderson affirmed Three things that makes a location suitable for economic activity:

 Amenable to human habitation: favourable climate for living

 Amenable to output production: presence of raw materials (materie prime)
 Amenable to transport of goods: for instance, the access to sea

These three points are called first-nature geography (due to natural activities).

We can distinguish two of geography forms:

 First-nature geography: non-man-made geography features as rivers and sea

 Second-nature geography: Man-made geography features as canals. An example is The Panama
Canal which causes a drastically decay of ship-transportation time.

In according to Henderson First-nature characteristics may alter in response to man-made change as

technological improvements (medicine, electricity, air-conditioning), infrastructural change (irrigation
system, canals, rails, tunnels), structural transformation (the Agricultural and Industrial Revolutions), Mix of
first- and second-nature geography should be weighted up.
*****insights********

Second agriculture revolution: it was happened in many western European countries in the centuries leading up the
industrial revolution. We observe ani Increase in labour and land productivities during 17-19th centuries through Crop-
rotation, better ploughs, land-enclosure, growing farm-size, etc.

As result there was freed up labour from use in food production and Increased urbanisation and labour devoted to
manufacturing/service.

In according to Henderson Two factors are particularly important for comparative development:

 The suitability of a region for growing food (agriculture)

 The suitability of a region for growing food (agriculture)

In his paper, offers a measure of both and a measure of economic activity at local level with light intensity.
***********insights******************

Why is trade important?

Gains from trade through division of labour (Ricardo: wine and cloth) and, falling trade-costs allow producers to reach larger
markets: This facilitates investments in more productive technologies. This is the way how US become the world economic leader

The result of study:

 The importance of growing food has declined over time, while the importance of trade has risen
 The location of economic activity in advanced economies is driven much more by agricultural
productivity than by trade suitability
 economic activity in less advanced economies is driven relatively more by trade suitability
 Countries with early urbanisation have more equally spaced economic activities than those with
late urbanisation (in this situation a redistribution of income could be useful for economic
development)
We can define two most important factors in urbanization in recent centuries:

 First, the rise of agriculture labour productivity: this released (liberato) labour from farm work and
food production.
 Second, the decline in transport costs and increased foreign trade (roughly 90% respect to 1930):
 Makes it less necessary to live near to where the food is grown
 But raised the desirability of being on a coast or navigable river

EXPLANATION OF THE STUDY

Outcome variable (dependent variable): measure the comparative development:

 Night-time lights data (2010 global Radiance Calibrated)

 Night light intensity at approximately 1 square kilometre
 Extremely fine-tuned details compared to earlier work (110 sqkm)
 Proxy for spatial distribution of economic activities worldwide

Explanatory variables:

 Agriculture: temperature, precipitation, length of growing period, land suitability, elevation,

latitude, and climate zones.
 Trade: distance to nearest coast, navigable river, major lake, and natural harbour
 Two base covariates: ruggedness and malaria

READING TABLE 1: fixed effect (F.E) is the effect due to first-nature geography. READING TABLE 2:
agriculture variable is important

BASELINE RESULTS:

 The 24 geographic variables account for 47% of global lights variation:

o Remarkable how a simple specification can account for so much
o Without any reference to the role that history might have had
 Country-level variation adds little once geography is accounted for:
o Country fixed effects account for 35% of lights variation on their own
o But only 11 percentage points when mixed with other covariates
o Whereas (invece) geographic factors account for 23 percentage points

Then, we can split the sampled nations into two groups: early and late developers, considering a cut-off
year: 1950, and dealing with unexplained differences. The split is made by education, urbanization and GDP
per capita.

The differences are roughly 0.17/0.28/0.092  HISTORY MATTERS

HENDERSON’S CONCLUSIONS: are economic activities determined by natural characteristics?

• Key contribution: focus on within-country development distribution (inequality within); nature has
surprisingly high degree of overall explanatory power; institutional and historical characteristics of
moderate importance; Split into agriculture- and trade-features creates new findings.

What explains comparative economic development?

 Early developers: agriculture explain six times more than trade

 Late developers: agriculture explains only 1.5 times more than trade
 Marginal effects: of agriculture are 19-33% larger for early developers, marginal effects of trade are
39-65% smaller for early developers
  Puzzling (incomprensibile) since early developers richer with smaller agricultural sectors

8th LECTURE (GUEST): RAILWAYS with Carlo Ciccarelli

 The importance of well-done Railways system:

 Input: as soon as possible into production
 Market: creation of open market
 National security: transport of armies
 Flow of knowledge

The construction in 1860-70 seem to have done little to reduce transport costs, it was driven by political
and military considerations. Those railways did not unify the domestic market, even less did they create the
prerequisite for economic growth: the capital they absorbed would have yielded more in other uses, and
the investment in railways retarded Italy’s economic growth.
Railway construction seems to have done more to reduce transport costs after 1880 than before; to the
extent that the economic growth of the 1880s can be related to railway construction it is more plausibly
related to the contemporaneous construction of the minor lines than to the prior construction of the
peninsular trunks.
The northern railways system was the most useful part of Italian system. The railways were of particular
significance for Piedmont, and the nearby Ligurian ports, because the “upper Po valley regions” were
affected by water supply problems/ scarcity of water resources which limited the development of internal
navigation. So, ports remained with a very limited hinterland until the railway provided an altogether more
practical alternative.
Instead, In the central and lower Po valley the railway’s net benefit was altogether less, both because of the
greater abundance of internal waterways, and because the railway itself diverted the upper valley’s
maritime traffic from the Adriatic coast to the Ligurian. The industrial progress of the upper Po valley, and
its links to Liguria, are hard to imagine without the railway.
9th -10th LECTURE: INDUSTRIAL REVOLUTION
Four recent and key contributors to the debate:
 Allen (EHR 2011): expensive workers and cheep energy
 Kelly, Mokyr, and O Grade (ARE 2014): health and human capital
 Clark (JEH 2006): growth-enhancing traits
 Jan de Vries (CUP 2008): an industrious revolution

The welfare ratio: how much time you can buy the consumption basket. 1346-1350 there was the Black
Dead (more deaths  lower labour supply  higher wages). In this image we observe a little divergence
between the North-west countries and the rest.

The first industrial Revolution (1750-1850), started firstly in England, later across Western Europe and the
United States. Generated a transition to new manufacturing processes from hand-production to the rise of
factories and use of machines. In particular, we observed a shift from animal and (wo)manpower to
machine (inanimate) power. Moreover, Steam engines helped power the rise of the factory system, and
Chemical manufacturing and iron production processes critical (important).

During the pre-industrial “cottage” production, the econ system was based on local house production,
instead with Industrial Revolution we saw the born of fist firms.

With the Industrialisation there was an increasing of output per person. We can define the most important
technical innovations:

• Steam-power (Steam-powered factories: Often emerged near coal mines) overcame the limitations of
water and wind power; Evaded the natural, seasonal cycles of their availability (because water and wind
are subjected to seasonal variation); Made production increasingly independent of location; Steam first
used to drain mines of water for easier access to coal; Steam and coal also helped increase furnace
temperatures; Helped improve iron-making processes (tools, buildings, rails); Mechanised cotton spinning
increased output per worker 500 times.

The Industrial Revolution changed the world: we observe a huge increasing in standard living condition and
labour market conditions, most important:

 Mechanisation massively increased output per person; Provided manufactured goods at a lower
price than earlier; Demand shifted from homemade to factory-made goods; Offered new jobs and
 job types in emerging factories; To men and to women and children; Shifted labour out of
agriculture (structural change); Caused increased migration from agricultural to industrial areas.

THE DESKILLING HYPOTHESIS

It’s important for today’s debate about the effects of robotization:

Fear that artificial intelligence will increase unemployment as luddite movement during the Industrial
Revolution. This movement had popularity because of Angry workers broke into factories and
destroyed new machines and they complained Complained new machines made their skills redundant

WHY WAS THE INDUSTRIAL REVOLUTION IN ENGLAND?

Four (potentially competing) theories in economic history:

 Robert Allen’s high-wage hypothesis (supply-side phenomenon)

 Joel Mokyr’s scientific-enlightenment hypothesis (supply-side)
 Greg Clark’s survival of the richest hypothesis (supply-side)
 Jan de Vries’ industrious-revolution hypothesis (demand-side)

A review of these hypothesis was made by CRAFTS, he compered Mokyr and Allen. Both books think
new technology was the decisive factor, but they openly differ with regards to how it came about.
More specifically:

 Mokyr: new technology because of 18th-century Enlightenment (illuminismo)

 Allen: new technology because it was profitable for producers

Crafts’ conclusion: authors agree more than they think.

CRAFTS: ALLEN THEORY

Allen tried to find the conditions for which the IR happened in England. In according to the author because
it paid to invent it there (and not elsewhere) and British labour was very expensive. So, Producers were
looking for labour-saving technologies, but at the same time commercial inventions were also very
expensive. In conclusion, the IR Would only occur where capital and energy was cheap (it’s the case of
England).

Then, Britain had a unique wage and price structure in the 18th century:

• Key in explaining the inventions of the industrial revolution, British wages very high by international
standards; energy very cheap. So, this configuration led British firms to invent new technologies, and These
technologies used capital and energy to replace labour. The result is that The Industrial Revolution resulted
from efforts to save on labour.

The Britain wages were high because of:

 High wages translated into higher living standards

 High living standards helped human capital
 Wages were high relative to cost of capital
 North-West British wages very high relative to cost of energy

In fact, if we consider the silver labour wages worldwide (a measure of nominal wage) we observe that the
one in England was higher than other ones in the rest of the world. What’s the problem? We should
consider the real wage. In order to consider the real wage, Allen built the “barebones basket” to convert
nominal wages into real wages.
It was composed by: Daily minimal consumption needs; Costs of goods added together. In this way, Allen
created a consumer price index.

The “Allen’s barebones basket” was based on several assumptions:

 1,938 calories per day per adult (half for children): for other authors it’s too low for active workers
to survive on, especially given that they had to be physically active. In response, Allen revised the
basket to 2,100 calories per adult
 Only men work but also children: (critic)
 200 hours worked (too weak assumption: also, more hours)

Then, if we consider the welfare ratio adjusted for real wage (following the Allen approach) we notice that
the one in England is higher than the other ones in the world. In addition, if we observe the wage-capital
ratio, we see that the one is higher in UK than in other countries.

Observing the cost of energy, we notice that it was extremely high in Paris and Beijing, instead considering
the ratio between wage and energy cost, we notice that it was extremely higher in Newcastle (where IR
started). What does higher ratio mean? When the ratio (W/C. E) is low, there is no incentive to substitute
workers with machines, so the ratio was higher in UK, in particular in Newcastle, so there was more
incentive to innovate in labour-saving technologies.

ALLEN’S PRECONDITIONS:

Reasons given for expensive labour and cheap capital and energy:

 International trade kept wages high despite population growth, so High wages made workers more
healthy and thus more productive and Higher labour-productivity increased their wages even
further.
 Coal deposits offered very cheap energy in NW England, and Growth of London fuelled NW English
coal industries

THE HABAKKUK THESIS:

In according to the author, Land abundance and labour scarcity led to high wages. The result was the
search for labour-saving technologies, ultimately stimulated the growth of machinery (classical explanation
of the US process of industrialization).

Allen combines Habakkuk with John Hicks’ idea of innovation (Hicks: labour-saving machines spurred
(spronato/ incentivato) by shift in relative factor prices).

DEBATED ROLE OF INVESTORS: ALLEN VS MOKYR

Allen also considers Mokyr’s idea about role played by science:

 Acknowledges (riconosce) many inventions appeared following Enlightenment but points out
(sottolinea) that their social background was privileged. These privileges were paid for by the high-
wage economy. So, Inventions wouldn’t have emerged in poorer regions of the world. Implicitly, a
scientific revolution was necessary but not sufficient.

Allen also asks why did industrial inventions not peter out? Earlier inventions did not create modern
economic growth, the answer to do (la risposta ha a che fare) with nature of industrial-revolution
inventions. So, many inventions were general-purpose technologies. At the end, multiple steam-use-
purposes sparked (innescato/provocato) widespread industrialisation.
 MOKYR’S THEORY:

Mokyr makes three key points because Allen might be wrong:

 Firms try to save on all costs not just those of labour

 Only 1/5 Industrial-Revolution inventions were labour-saving
 Technological change is constrained by knowledge, so no Industrial Revolution without scientific
knowledge and highly skilled workers.

In according to Mokyr, England became the leader of the Industrial Revolution because UK took better
advantage of her human and physical resources, thanks to the Enlightenment and Baconian knowledge.
Finally, had better institutions for creating better economic incentives.

Specifically, the bacon’s method (scientific method) involves careful observation; applying rigorous
scepticism about what is observed; formulating hypotheses based on the observations; experimental
testing of hypotheses; and refinement/elimination of the hypotheses based on the experiments.

Mokyr points out the importance of Enlightened Economy. He explains that in order to have an industrial
revolution, one needs the right combination of:

 Scientific principles and knowledge (emerged with Enlightenment)

 Inventors and engineers combined with skilled craftsmen
 Ability to solve practical problems and disseminate (diffondere) the results
 Institutions creating the right incentives for entrepreneurs

These elements are captured by the so-called “gentlemanly capitalism”.

KEY DIFFERENCES

Crafts underlines the principal differences between Mokyr and Allen. In particular the concepts of micro
and macro inventions.

 Macro inventions: grand scientific ideas (assumed by both)

 Micro inventions: incremental production improvements (both)

R&D is important to implement macro inventors (for Mokyr the R&D is macro; instead for Allen R&D is
micro).

For Allen because R&D is micro, producers take steps (prendono provvedimenti) to do this (role of profits),
instead, for Mokyr R&D is macro, so it’s not responsive to price signals (underline the role of social
function).

CRAFT’S CONCLUSION

Perhaps the two hypotheses are not incompatible, for instance, redefining macro-versus-micro inventions
could prove helpful. More work needed to empirically test overarching ideas (idee generali/ comprende
tutto).

Alongside evidence on micro inventions and what triggered (innescare) them.

We cannot discard price signal nor scientific knowledge.

So, a combined theory of profitable use of science seems optimal

 MOKYR AND HUMAN CAPITAL:

We don’t observe IR during 1350-1400 because of lack of knowledge. We see high welfare ratio because of
black deaths (see initial part), higher wages didn’t lead to innovation (higher innovation) because of not
enough knowledge.

Focus on human capital and quality of British labour (precocious albion): in according to Mokyr, the Key
factors in industrialisation are physical quality and mechanical skills, and British workers had much higher
levels in 1750 than elsewhere. This helped them to adopt new inventions “easier, faster, and on a large
scale”. Consistent, in part, with the higher wage’s theory of Allen.

In according to Mokyr, Scientific knowledge important but available not just in Britain but what matter is
the effort to turn knowledge into an Industrial Revolution. This effort required skilled and capable artisanal
workers. A large amount of training and adeptness (abilità) is required, and it was available in Britain thanks
to healthy workers and good institutions.

British labour better fed and healthier than elsewhere (high wages effect), They also had better institutions
for education, in particular, System of apprenticeship generated army of highly skilled workers, but these
could not have emerged without good health.

In addition, System of poor laws helped in Britain but not in France. Once scientific knowledge arrived, the
Brits were better to explore it.

So, healthy workers are smarter.

MOKYR VERSUS ALLEN

Seemingly conflicting hypotheses because:

 Allen: high wages motivated labour-saving technology

 Mokyr et al: healthy workers have higher productivity, and higher productivity pays higher wages
(reversed mechanism), but also facilitates the adoption of new technology. So, for Mokyr the
innovations could happened without the Allen’s price-signal theory.
Because Mokyr said that R&D is a macro phenomenon, so it refers to society and doesn’t response to price
signals (profit doesn’t matter), instead, Allen said R&D is at micro-level, so it’s sensitive to price variation
(profit matters).

MECHANNICS OF INDUSTRIAL REVOLUTION

Mokyr expands their previous ideas:

Skilled artisans important in the Industrial Revolution, because they served as the link between scientific
knowledge and innovations. In addition, offers a new perspective: static pre-1800 wages cover up regional
shift (coprono Il cambiamento regionale), more specifically, we observed a regional shift from traditional
high-wage agricultural areas in Southern England (LONDON) to low-wage, poor-soil areas with skilled
workers in the North (Newcastle).

STATE OF ART ABOUT IR

Insists the Industrial Revolution was English because of human capital, Britain had scientific knowledge and
skilled workers to implement it.

But The study poor to show these workers absent in (say) France (maybe the presence of a guilty system
which didn’t allow technology innovation or the presence of catholic system), and unclear about the
sources of wages displayed in the graphs.
11th lecture (guest): Does trade liberalization boost innovation? Evidence from French industrial sectors in
the 19th century with Carla Salvo

How French industrial producers responded to 19th-century trade liberalization in terms of adopting a key
technology at the time: the steam engine. In particular she analyses the changes after the Cobden Chevalier
Treaty of 1860 (between UK and France, the goal was reinforcing the period of pace).
The study found that steam-power use rose 60 percent more if the industry was exposed to the trade-
liberalization contained in the Treaty than otherwise. Industries with no import-tariff changes, or industries
that were located in areas far from London or were difficult to reach in terms of transportation, were
relatively more anchored to old technologies. So, the differences in technical change were ultimately
caused by more or less exposure to competition from the British producers.
The study doesn’t support the so-called Schumpeterian negative effect of trade on innovation (Here the
different role of trade is explained by the sample choice).
Trade liberalization had a positive and profound effect on technical change, it could be a direct response to
increased foreign competition
12th lecture: COAL SHORTGAGE the Italian case (with Vania Licio):

The goal is estimating the coal price in Italy from 1861 to 1911. In Italy the use of coal for industrial

production was strictly linked to its import and distribution (shed light on the North-South divide, and Coal
price measurement contributes to the understanding of the persistence of the North-South divide).

Still in 1861 the country was mostly dependent on traditional sources, From the 1880s onward, coal
consumption accelerated. Coal consumption growth combined with the decreasing availability of
traditional sources. Without national coal the imports were the only solution.

The price of coal was particularly expensive, due to the difficulties linked to transportation, typically 4-5
times higher than one in UK.

British was one of the principal exporters of coal (the destination was principally EU). The goal of paper is
computing the price coal which consider all transport cost. The first step was the division between city with
port (coal arrived directly) and without port.

In city with port the price coal was PRICE_COAL+SHIPPING COASTS. To obtain shipping costs for all years, I
compute the percentage differential between the transport costs in Genova and those in each port in 1882
and apply that differential to the transport cost provided by Harley, and the exchange rate as lire per ton.
We can observe a decreasing pattern for coal price in city with a port.

Regarding the Coal price in provinces without a port we compute the price as COAL_PRICE + INLAND
TRANSPORT COSTS (railways or truck so on…). The inland costs are affected by infrastructure distances and
variable or fixed tariffs. The coal was transported mainly: railways or roman road network. We observed a
consistent reduction of railways. Aggregating the data and dividing by geographic areas we observe a
decreasing pattern but a persistent divergence in areas (north-west > than center and genoa).

Then, if we consider a large number of provinces (to measure the distance in terms of transportation), we
observe coal price differential with higher provinces (island +9.1%; center +3.4%; south +1.5%). Then
considering the water availability we observe a consistent reduction in all parts of Italy, but in this case
North-West exhibit a lower price (in decreasing order: North-West, North-East, Center, Islands, South).

A coal price measure at the local level captures: the distance from coal reserves: geographic component -
the natural endowment (first-nature geography); and the development of the transport infrastructure:
institutional component -the prevailing transport costs (second-nature geography).

This measure helps to explain the origins of regional divisions and the importance of coal for Italian
Industrialization.
13th lecture: INDUSTRIAL REVOLUTION

Greg Clark’s theory: survival of the richest. For the author the Institutions (e.g. property rights) very popular
but fail on timing, Human capital and skill premiums have low explanatory power, Difficult for endogenous
growth models to explain ‘hockey stick’, so they key conclusion is that models of industrialisation largely
unsuccessful. (hockey-stick we consider the efficiency of English economy).

ROLE OF INSTITUTIONS

In according to Douglas North, Institutions are critical to economic development, they’re defined as
humanly devised constraints that structure political, economic and social interactions. Composed by formal
rules (laws and property rights) and informal restraints (restrizioni) (sanctions, traditions or taboo so on).

Institutions contribute to order and safety in society: Help economic incentives to operate as they are
meant to (aiuta gli incentivi economici ad operare come dovrebbero); Multiple examples in history of
institutions or institutional changes (for instance the Glorious Revolution: Parliament overpowered the
Crown or the Patent Law: possibility to secure profits from invention). For Clark the Glorious Revolution had
no impact on average earnings and Patents boomed only after the Industrial Revolution (after 1750). FIG.4)
the efficiency of English economy doesn’t change from 1600 to 1770.

ROLE OF HUMAN CAPITAL

There are several theories that emphasise the role of knowledge accumulation. For Clark literacy rates
ought (dovrebbero) to rise but flat during industrial revolution also for the skill premium (reward to
education). In addition, growing literacy linked to reading the bible, not the study of science. Literacy offers
little in the way of productivity for a factory worker.

For Clark and Hamilton cultural/genetic traits matter. The Riches are prone to save and entrepreneurial,
then they could afford larger families and had more surviving children. Growth-enhancing traits (I tratti che
favoriscono la crescita) grew among pre-modern populations, helped set the foundation for the industrial
revolution. A fundamental element to understand the Clark’s theory is the Malthusian model.
For Clark the society was a Malthusian society (higher wage  higher populationlow wageslow
wages). But rich are able to face large families due to wealth (exhibits higher survive children rate).
However, the Clark could be too simple with the risk of oversimplifying the history.

JAN DE VRIES’ INDUSTRIOUS REVOLUTION (DEMAND-SIDE)

The author shows an early-modern period dilemma: the English wages trendless going in run-up to the
Industrial Revolution, but at the same time more and more goods show up in probate inventories. The
probate inventories were a list of items recorded at someone’s death, and many probated items were
luxury-like at the time.

For the author an “industrious revolution (rivoluzione operosa)” (WORK MORE AND HARD TO GAIN MORE)
preceded the industrial revolution. Luxury goods began to emerge during the 17th century, and it was
marked in England and low countries, and their presence raised the value of money and of earning it.

So, People responded to novel goods by working more to earn more. More specifically, with the industrious
revolution early-modern working year grew longer, but day wages flat but annual incomes grew larger
thanks to more work (more day worked). The raise in annual incomes paid for a “consumer revolution”. In
according to the author, the increased demand (due to higher annual wage) prompted producers to invent
machines. The problem is there weren’t sufficient data about annual wages and how may days be worked
by the people (Allen assumed 250 days per year).

For instance, Broadberry re-estimated GDP/worker in England, 1250-1850, finding that GDP/worker started
rising already around 1650 but this trend conflicts with wage stagnation until 1800. So, the flat day wages
and growing output per worker could mean more work per year and it represents and indirect support of
Jan De Vries’ theory.
From 1650 we observe the so-called Engels’ pause: (profits raised but not the real income). The golden age
of labour black dead caused lower workers and higher wages (labour supply shortgage).

The problem continues to be the estimation of day worked (Voth; Clark and Van Der Werf; and Blanchard),
these papers suggest that he premodern working year did indeed grow longer.

Instead, Allen and Weisdorf with an Indirect method found the minimal days worked to survive (200 days),
funding that urban and rural workers faced different situations, the first work more to buy new goods and
latter work more to survive (Malthusian trap holds). Then, regarding the rural workers we observe an
increase in days workers, while in urban zone we don’t observe this phenomenon, so we say that in
countryside we assist to an “Industrious Revolution” but not consumption revolution, instead in Urban zone
we have a consumption revolution.

Then, Humphries and Weisdorf found an alternative measure of days worked, in equilibrium annual wage =
days worked x day wage, and days worked = annual wage/day wage. They didn’t find Engel’s pause (no
basis for Marxism). SECONDO ME E’ UNA CAZZATA.

Comparing England and Italy we find a divergence in annual wages.

Moreover, we can observe an Industrious Revolution in days worked (days increased from 1350 to 1850).
how long was the premodern working year in Britain: Some 200 days per year before the Black Death;
some 200 days per year before the Black Death; some 200 days per year before the Black Death; longest
working year in history probably during Industrial Revolution

Unifying all four hypotheses

 Clark: growing entrepreneurial traits in the population

 Mokyr: scientific knowledge is needed to mechanise production
 Jan de Vries: the Industrial Revolution was demand-driven
 Allen: producers respond to price signals and to demand
14TH lecture with Ale Quintiliano: Historical Economics for Africa, cultural persistence, and Christian
missionaries

African growth two faces: optimistics [Neoclassical style: see immense unrealized potential from capital
accumulation and structural transformation that has only recently started and from better
management of natural resources. Pessimistics [poverty trap: that Africa’s future is bleak, given its
history of conflict, extraction, and underdevelopment dating back to the slave trades and the early
colonial era.]

Cultural persistence: historical events affect culture, culture affects the economy, and culture is
persistent -> historical events persistently affect the economy. Necessary taking culture into account
for the optimal design of policies.

Invisible barriers: ethnic borders, Christian missionaries, and long-term development in Africa

Earlier work on Africa has shown that Ethnic diversity has negative effect on economic development
and Christian missionaries have positive effect on economic development. So, this latter is able to offset
the negative effect of ethnic diversity [yes, up to 20 km away from a mission station].

How would missionaries offset the negative effect of ethnic diversity?

Declared mission goal to help, protect, and integrate ethnic minorities; A common platform for
communication and cooperation; The Love-thy-neighbour philosophy of moral universalism (Enke et al.
2021); Reducing the political salience of ethnicity: a Christian middle class.

We use light intensity as a proxy of development level, as Key explanatory variables we consider
Christian Mission influences [presence of a mission station (Roome Atlas)] and Ethnic diversity [proxied
by ethnic borders (Ethnographic Atlas by Murdock)], instead as Standard set of controls [geography,
demography, history]. Our hypothesis: missionary activity brought development in those areas with
ethnic conflicts. the first result is that Missionaries more than cancel out the negative effects of ethnic
borders. Then controlling for the distance, emerge that missionaries’ activities offset the negative
effects of ethnic conflicts up to 20km away from a mission station. Then, controlling for the distance
from ethnic borders, we observe that ethnic borders have a persistent negative impact on
development. However, they don’t when a (Roome) mission was present in 1924 and the effect is felt
up (sentito) to 20km away from the mission