Spatial inequality in prices and wages: Town-level evidence from the First Globalisation

Stefan Nikolić
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Stefan Nikolić: Bocconi University

No 232, Working Papers from European Historical Economics Society (EHES)

Abstract: This article leverages uniquely abundant town-level data to examine spatial inequality in prices and wages during the First Globalisation. I build a new dataset on prices of traded and household goods, and wages of skilled and unskilled workers for a panel of 42 towns in Serbia, in the period from 1863 to 1910. I apply the welfare ratio approach to calculate real wages of day labourers and masons. I find strong convergence in grain prices and costs of living, but divergence in wages, both nominal and real. I estimate panel-data models to explore drivers of inter-urban differences in prices and wages. The main results suggest that falling transport costs decreased price gaps, whereas rising population differences increased wage gaps. The findings are consistent with theoretical predictions of new economic geography and urban economics.

Keywords: market integration; grain prices; real wages; Serbia; pre-1913 (search for similar items in EconPapers)
JEL-codes: N33 N73 N93 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2023-04
New Economics Papers: this item is included in nep-his and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:hes:wpaper:0232

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