July 26th 2022

PA.153 | Living Standards in Latin America: Income, Wages and Human Capital (XVIII to XXI centuries)

Parallel Sessions
14:00 - 17:30 - Recherche Sud - Room 0.033
The study of living standards in Latin America became a promising field in economic history, particularly in the last decades. Traditional obstacles, such as the well-known shortage of sources to study pre-modern times or the difficulty in building time series, have begun to be overcome. New datasets, methods, and approaches have been crucial to strengthen the stance taken by this topic in the extant literature. The subject has also gained a place in several Latin American Economic History congresses and has even had specific sessions in the last three WEHC. Despite the progress in the field, there is still the need to go deeper into methodological aspects as well as into the discussion and revision about what we have learned so far. For instance, about some main issues of the economic history of Latin America; the origin, in time and place, of the Divergence with the advanced economies; the explanations about inequality as a permanent feature of this continent; the heterogeneity in living standards between the regions; the effect of the First Globalization in the social and economic aspects of the society; the emergence of mass democracy and the living standards; to mention some of them. This session intends to continue this trend of research, through the discussion of empirically-based contributions focused on the evolution of different dimensions and variables about living standards in Latin America, from the eighteenth century to the present. Proposals will mainly deal with the following topics: wages; cost of living and consumption; labor, income and wealth; welfare indicators, and human capital The papers cover regional studies, as well as national analysis for several countries - Argentina, Chile, México, and Uruguay-, and others, combine broader visions of Latin America.
E - Macroeconomics and Monetary Economics
Román Carolina - Universidad de la República
Mario Matus - Universidad de Chile
Juan Luis Martirén - Instituto de Historia argentina y Americana "Dr. Emilio Ravignani"
Wealth inequality in colonial Hispanic-America: Montevideo in the late 18th century
Pablo Marmissolle - Universidad de le República (Uruguay) and Universitat de Vàlencia (Spain)
María Inés Moraes - Universidad de la Republica
Rebeca Riella - Universidad de la Republica
Carolina Vicario
There has recently been renewed interest in pre-industrial inequality among economic historians, but there are still few case studies about wealth inequality in pre-industrial Latin America, particularly involving colonial Spanish America before 1820. This paper presents a study of wealth inequality in Montevideo, an area of the Viceroyalty of the Río de la Plata, in the late colonial period. The work addresses the level of wealth inequality, the composition of wealth, and its relationship with social structure in Montevideo in the late 18th century. It uses a dataset of probate inventories and population records as the main sources, estimates a Gini index, and presents a stylized picture of the social structure, analyzing the differences in wealth between social groups in 1772-1773. The main finding is that wealth inequality in Montevideo was similar to that of the English colonies of North America in 1774, and to the less unequal pre-industrial economies in Europe at the same time. Although most of society formed a relatively wealthy middle class, however, some important assets were strongly concentrated at the top of society.
Rent-Wage Inequality in Mexico City, 1770-1930
Amílcar Challú - Bowling Green State University
Israel García Solares - University of Notre Dame
This paper explores the evolution of income inequality in Mexico City from 1770 to 1930 by measuring the gaps between urban real estate rents and unskilled wages. It creates, to our knowledge, the first long-term series of rental income and rental costs for Mexico City, and crosses it with the wages of unskilled construction workers. This approach follows the path of previous studies by Arroyo-Abad, Bértola, Williamson, among others, who showed that rental wage ratios correlate well with synthetic inequality measures such as the Gini coefficient because they contrast the earning power of the wealthy (who primarily derived their income from land and capital) to that of the unskilled laboring classes. In this essay we show that the rental wage ratio was relatively stable over most of the nineteenth century, ballooned at the turn of twentieth century and continued at a high level at the end of the period concluding with the large-scale mobilization of urban tenants.
Cost of Living and Real Wages in a Transitional Economy Buenos Aires (1776-1830)
Juan Luis Martirén - Instituto de Historia argentina y Americana "Dr. Emilio Ravignani"
Julio Djenderedjian - Instituto de Historia argentina y Americana "Dr. Emilio Ravignani"
The paper analyzes the evolution of prices and real wages in Buenos Aires between the end of the 18th century and the first decades after the independence (1776-1830). The dataset includes Consumer Price Indexes of 1st and 2nd generation and series of daily wages for construction workers with different levels of qualification (pawns and master masons). We built these time series using private accounts from probate records, hospital bills and local newspapers. The period chosen is relevant to analyze the late colonial growth cycle in the Viceroyalty of the Río de la Plata, the effects of Independence wars (1810-1821) and the commercial opening towards the Atlantic markets (since 1809). This is an unprecedented approach, since the existing literature had only conducted partial analyses of different periods. We postulate that wages began a downward trend since 1816 due to the increase in the relative price of meat. Although the first part of the 1820s seemed to have positive effects, the local currency crisis and the effects of the war with Brazil (1825-1828) had a negative impact on the purchasing power of urban wages.
Real Wages and Standards of Living in urban Buenos Aires, 1820-1850
Tomás Guzmán - Universidad de Buenos Aires [Buenos Aires]
The use of prices and wages as instruments to measure the standard of living in the Latin American economies of the 18th and 19th centuries is receiving renewed attention in historiography. These developments raise many methodological questions and challenges, regarding sources, their treatment, or appropriate indicators. We need to integrate different types of price and wage series. Consumption baskets also require a unified scheme. In turn, the historical processes of the commodification of labor need attention. A comparative framework between regions of Latin America is now a standard in historiography, but there are still some methodological disagreements. The objective of this paper is to review some of these challenges in the case of the city of Buenos Aires (Argentina) between 1820 and 1850. We provide new empirical evidence on prices and wages, and we try to combine them with the existing one. Firstly, we present new and old series of salaries for unskilled and qualified workers. Second, we introduced new price series, coming from hospitals, for a variety of consumer items. Third, we reviewed the consumer baskets available in the literature, and performed reformulations of components, quantities, and spending weights, for unified treatment. With these three elements, we explore several possibilities in the design of real wage series, to identify short-term and long-term trends. Our main hypothesis relates the cycles of improvement or worsening of workers' well-being as a consequence of political instability and wars, as well as changes in the labor market generated by the take-off of an economy that exports raw materials.
Decline and Recovery. Cost of living and real wages in an inland region of the Río de la Plata (Santa Fe, 1815-1865)
Carina FRID - Universidad Nacional de Rosario
Santa Fe is a paradigmatic case of the severe economic consequences endured after 1810 in River Plate’s inland regions as the result of the destruction of capitals accumulated in the late-colonial period (breeding cattle production and mercantile capitals). Living conditions in Santa Fe deteriorated for a long-lasting period marked by inflationary cycles, low productivity, and stagnation of the economy (1820-1840). Real wages fell because of the fragility of labor demand, increasing living costs and scarce availability of investment capitals. Since the mid-1840s both, real wages and living standards, recovered gradually as the result of flourishing commerce, growth of productive activities and expansion of investment capitals. This study proposes a long-term analysis of the evolution of the well-being indices of an inland region of River Plate throughout the first half of the XIX th. century. It uses methodologies adopted by international standards of welfare indices (price series, wage series of the lowest categories and those with the highest degree of qualification in the public and private sectors, basic subsistence baskets and respectable baskets). Basic information on wages and prices of consumer goods baskets was retrieved from long-term data series (expenditure books of religious communities, state expenditures, commercial and civil lawsuits).
Economic wellbeing in rural and industrial landscapes in Mexico: 1910-1940
Humberto Morales Moreno - Universidad Autonoma de Puebla
In this paper we show some data about economic standards of living of rural and manufacturer workers in the Mexican Revolution (1910-1940). The main idea is to get some conclusions about the role of the strong State Led Production model that was born of this social and political revolution especially in the manufacturing sectors compared with the more traditional rural landscapes that supported old Hacienda system until 1940’s. We build price series of an observed historical consumption basket in between 1910-1940 in the State of Puebla.
Newly Rich, Not Modern Yet: Argentina Before the Depression
Lucas Llach - Universidad Torcuato Di Tella
I address in this paper several exceptionalities of Argentina's pre-Depression experience. First: its level of development, as captured by dimensions other than GDP per capita, was not as high as its rank in per capita income, consistently #11 or better, held during 1905-1930. Second, its record growth in 1870-1914 was, to some extent, a one-shot affair: the appearance of a new transport technology (railways) allowed for the incorporation of agricultural lands previously unused or dedicated to low productivity ranching. Third, given the limits on natural resources and its dilution through massive migration, subsequent growth depended on physical and human capital accumulation, two dimensions in which Argentina departed somewhat from the rich countries of the day. The experience of the 1920s suggests that a change towards a more capital intensive economic structure was beginning to take place, but was cut short by the Depression.
The Chilean economy between 1990 and 2020 through the evolution of real wages.
Mario Matus - Universidad de Chile
The Chilean economy underwent a remarkable transformation between 1990 and 2020, but if its economic growth, the reduction of its poverty and the general improvement in living conditions are irrefutable, something similar did not happen with its real wages. The reason lies in the fact that real wages were severely punished for around 15 years (1971-1986), after a hyperinflation of 600% between 1971-73 brought them down to a quarter of what they were in 1969 and then the dictatorship of Pinochet kept them at around half their 1969 value. Subsequently, once democratic governments were reinstated in 1990, wages still represented slightly more than 50% of their 1969 value, and despite the notable improvements in macroeconomic performance that the country exhibited between 1990 and 2019, the maintenance of institutions with an inegalitarian bias seriously delayed salary recovery, so that the real salary of 1969 could only be restored in 2008, and only from 2009 to 2019 (Social Outburst) was there a rise net sustained in relation to 1969. Even so, significant learning can be identified in those last 30 years, such as locating the institutional burdens that need to be resolved urgently and its future challenges.
Inflation, living standards and the failure of the compromise state (Chile, 1932-1970)
Mauricio Casanova - Universidad de Concepción
The literature assumes that after the crisis of 1929 the political-economic model in Chile was characterized by two aspects. First, a state-led industrialization model based on the cooperation between leftist governments and business associations. Second, the increase in living standards experienced as the result of the ISI-related programs. In this article, an alternative historical interpretation is proposed. First, I estimate the incidence of income poverty in rural areas, the capital, and selected regions. Next, I show how the debt monetization policy contributed to the maintenance of high level of income poverty. The arguments of this paper differ from both leftist and monetarist interpretations. The former consider that the model had a pivotal role in the increase in living standards, while the letter argue that the excessive state intervention provoked an economic and social crisis. Instead, I attempt to show that the failure of the model is related to a state incapable or unwilling to administrate its own resources. Regardless the positive or a negative impact of the role of the state, I put into question the idea of this period as being characterized by state intervention Key words: Chile, compromise state, state-led industrialization, income poverty, debt monetization
Welfare Indicators in Chile, 1900-2020
José Díaz-Bahamonde - Pontificia Universidad Católica de Chile
This article examines the evolution of Chilean living standards during the 20th Century. Following Gallardo-Albarran & de Jong (2020) we built an indicator that combines material living standards, health, working time, and inequality. The performance of this indicator and the contribution of the inputs is compared with other available welfare indexes for the Chilean economy.