Working Papers

Authors: Tony Atkinson

Jan 2002

Abstract: In 1909 the United Kingdom Government introduced “super-tax”, which was an additional income tax levied on top incomes. This provided information on the distribution of total incomes that had not previously been available on a regular basis, since under the ordinary income tax, the authorities did not know the total income of individuals, which could be the subject of several separate assessments. Super-tax remained in existence until 1972, by which time other income tax sources (the Survey of Personal Incomes) were in place to allow the series to be continued. The aim of this paper is to examine what can be said from the published super-tax statistics about the evolution of top incomes in the United Kingdom. The paper spells out the limitations of the super-tax information, and the problems in establishing control totals for total population and total income, but argues that it provides a unique source of evidence about the distribution of top incomes covering virtually the whole of the twentieth century. The resulting picture, if blurred in places, allows us to draw broad conclusions about developments over the twentieth century. There is no longer the extent of inequality to be found before the First World War, with the Upper Ten Thousand receiving nearly a tenth of total income. The magnitude of the change may be need to be qualified in the light of fiscal re-arrangement, but there have been distinct periods of equalisation, notably during the two world wars, from 1946–1957 and from 1965–1972. But there is no steady trend. There have been plateaux. Since 1979, we have seen a reversal, with shares of the top income groups returning to their position of fifty years earlier. The equalisation of the post-war period has been lost.

Reference: 043

Individual View

Authors: Walter  Eltis

Dec 2001

Authors: Charles H. Feinstein, Mark Thomas

Jul 2001

This paper argues that all historical data series should be accompanied by formal estimates of their margins of error. We discuss the nature of errors in data series and review earlier attempts to assess their reliability. We show how overall margins of error may be calculated for historical series from judgments on the reliability of their components, and how these allow readers both to appraise the estimate and to test the implications of applying different standards. An illustration is provided for Hoffmanns index of British industrial output, 1770–1831. The calculations emphasize the value of this approach to the recent debate on growth rates during the industrial revolution and suggest its merits more generally.

Reference: 041

Individual View

Authors: Paul David

Jul 2001

This essay examines the economics of patronage and the roles of asymmetric information and reputation in the early modern reorganization of scientific activities, specifically their influence upon the historical formation of key elements in the ethos and organizational structure of publicly funded open science. The emergence during the late 16th and early 17th centuries of the idea and practice of ‘open science’ represented a break from the previously dominant ethos of secrecy in the pursuit of ‘Nature’s Secrets.’ It was a distinctive and vital organizational aspect of the Scientific Revolution, from which crystallized a new set of norms, incentives, and organizational structures that reinforced scientific researchers’ commitments to rapid disclosure of new knowledge. The rise of ‘cooperative rivalries’ in the revelation of new knowledge, is seen as a functional response to heightened asymmetric information problems posed for the Renaissance system of court-patronage of the arts and sciences; pre-existing informational asymmetries had been exacerbated by increased importance of mathematics and the greater reliance upon sophisticated mathematical techniques in a variety of practical contexts of application. Analysis of the court patronage system of late Renaissance Europe, within which the new natural philosophers found their support, points to the significance of the feudal legacy of fragmented political authority in creating conditions of ‘common agency contracting in substitutes.’ These conditions are shown to have been conducive to more favorable contract terms (especially with regard to autonomy and financial support) for the agent-client members of western Europe’s nascent scientific communities.

Reference: 023

Individual View

Authors: Michael Biggs

Apr 2001

Formal models prove the possibility of positive feedback in collective action; the metaphors of historically minded observers convey the same insight. It is still neglected in the literature on social movements, which emphasizes exogenous factors above all, political opportunities rather than endogenous processes. This paper draws on an intensive investigation of strikes for the eight-hour day in Chicago in May 1886. It demonstrates that changes in economic and political circumstances cannot explain the magnitude of the strike wave. More importantly, it provides evidence for positive feedback in collective mobilization, showing how optimistic expectations percolated through the working class in the spring of 1886. As each new group of workers became hopeful enough to organize, the fact of their organization inspired other groups to follow suit. New hopes gave rise to new organization; new organization became evidence that such hopes were justified.

Reference: 040

Authors: Peter Temin

Mar 2001

I argue that the economy of the early Roman Empire was primarily a market economy. The parts of this economy located far from each other were not tied together as tightly as markets often are today, but they still functioned as part of a comprehensive Mediterranean market. This conclusion is important because it brings the description of the Roman economy as a whole into accord with the fragmentary evidence we have about individual market transactions. In addition, this synthetic view provides a platform on which to investigate further questions about the origins and eventual demise of the Roman economy and about conditions for the formation and preservation of markets in general.

Reference: 039

Individual View

Authors: George Speight

Dec 2000

Although the high level of private house-building in the 1930s was an important episode in Britains economic and social development, the literature has not addressed adequately the nature of the demand for these houses. In particular, the class and income characteristics of their purchasers are poorly understood. The conventional wisdom in this area is due to Swenarton and Taylor, who have argued that the vast majority of house buyers were middle class and that few manual workers could afford to buy. In fact their argument contains several important flaws. This paper uses a broader and more reliable collection of evidence to show that working-class households broadly construed bought a large proportion of new houses from 1932-3 onwards. (The six years 1933 to 1938 account for well over half of all houses built privately in the interwar period.)

Reference: 038

Individual View

Authors: Martin West

Oct 2000

By anachronistically attributing the origin and growth of popular education entirely to state intervention, standard histories of state education have failed to delimit sufficiently the states role in educational development. This paper offers a theoretically based examination of the British states intervention in the emerging market for popular education in England during the nineteenth century. It complements conventional neoclassical analysis with recent developments from the fields of methodological individualism and new institutional economics to identify the specific reasons the state first became involved in mass education. The eventual national system of state-provided, free elementary schools, managed by local representative bodies and funded in part through local rates is re-conceptualized as an imperfect solution to problems inherent in achieving an optimal level of schooling in the emerging mass market for education.

Reference: 037

Individual View

Authors: Alasdair  Crockett

Aug 2000

In the sociology of religion of the past thirty years or so, one can identify three major approaches to the relation of religion and modernity: secularization theory, the Stark-Bainbridge rational choice theory, and the Finke-Stark “supply-side” theory. In this paper, I study churchgoing rates in England in 1851 to examine which of these three theoretical approaches appears the most valid. Victorian England provides a compelling case study. Not only are the data very good (uniquely so in the case of Britain), but also England in 1851 takes us back to one of the original locales of urban-industrial development. My conclusion is that both “supply-side” (of religion) and “secularization” processes were influencing English churchgoing rates in 1851. However, the former were much more limited and transient in their effect, being restricted to isolated rural areas. In the more urban places, where most people lived, secularization processes were operating. There are parallels between this “duality” of process operating in rural and urban England in 1851 and the fact that churchgoing appears to have increased during the nineteenth century up to that point, but declined, unabated, thereafter.

Reference: 036

Individual View

Authors: Liam Brunt

Feb 2000

Between 1700 and 1850, English grain yields were substantially higher than those attained in other countries. It is widely believed that yields were constrained by the availability of nitrogen, and that supplies of nitrogen were effectively limited to animal dung produced on the farm. This paper presents the first systematic analysis of off-farm sources of nitrogen, such as urban and industrial waste. We show that the use of off-farm nitrogen was both widespread and intensive by 1700, contrary to the received wisdom. We further argue that there was only modest growth in the use of off-farm nitrogen up to 1850. We explain this pattern of use of off-farm nitrogen by supply and demand factors. We use a new method of estimation to show that the overall impact was to raise wheat yields by a constant 20 per cent throughout the period.

JEL Codes: N5, Q1, Q2

Keywords: agriculture, renewable resources, extractive industries

Reference: 035

Individual View

Authors: Avner Offer

Jan 2000

GDP per head is not only an economic indicator, but is widely used as a welfare indicator. This use not well founded in economic theory. The paper compares income per head with a three groups of alternative indicators: extended national accounts, social indicators, and indicators of subjective well-being. All of these methods indicate a decline in the welfare productivity of GDP goods over time.

Reference: 034

Individual View

Authors: Paul David, Gavin Wright

Oct 1999

A marked acceleration of total factor productivity (TFP) growth in U.S. manufacturing followed World War I. This development contributed substantially to the absolute and relative rise of the domestic economys aggregate TFP residual, which is observed when the growth accounts for the first quarter of the twentieth century are compared with those for the second half of the nineteenth century. Two visions of the dynamics of productivity growth are germane to an understanding of these developments. One emphasizes the role of forces affecting broad sections of the economy, through spillovers of knowledge and the diffusion of general purpose technologies (GPTs). The second view considers that possible sources of productivity increase are multiple and idiosyncratic. Setting aside possible measurement errors, the latter approach regards sectoral and economy-wide surges of TFP growth to be simply the result of aggregating over many essentially independent underlying cost reductions, some of which carried more weight than others. Although there is room for both views in an analysis of the sources of the industrial TFP acceleration during the 1920s, we find the evidence more compelling in support of the first approach. The proximate source of the TFP surge lay in the switch from declining or stable capital productivity to a rising output-capital ratio, which occurred at this time in many branches of manufacturing, and which was not accompanied by slowed growth in labor productivity. The 1920s saw critical advances in the electrification of industry, the diffusion of a GPT that brought significant fixed capital-savings. But the same era also witnessed profound transformations in the American industrial labor market, following the stoppage of mass immigration from Europe; rising real wages provided strong impetus to changes in workforce recruitment and management practices that were underway in some branches of the economy before the War. The productivity surge reflected the confluence of these two forces.

Reference: 033

Individual View

Authors: Liam Brunt

Sep 1999

The Industrial Revolution in England was characterised by early and rapid labour release from agriculture to industry. This was facilitated by rising levels of labour productivity in agriculture which permitted labour to be released without excessive upward pressure on food prices. New technology played a central role in raising agricultural productivity but the importance of particular innovations remains controversial. In this paper we develop an arbitrage model of crop rotation which enables us to estimate the impact of crop rotation on wheat yields, requiring only the yields and prices of crops to be known. We apply this technique to eighteenth century English agriculture to assess the importance of two new crops in raising the yield of wheat (the primary agricultural output). Contrary to the received wisdom, we show that turnips substantially pushed up wheat yields but clover pushed down wheat yields. We confirm this result by comparing our estimates to both experimental data and production function estimates. Further detailed analysis facilitated by the new model enables us to explain this surprising result in terms of management practices pursued by farmers.

Reference: 032

Individual View

Authors: Paul David, Gavin Wright

Sep 1999

The phenomenon of recurring prolonged swings in the total factor productivity (TFP) growth rate is approached in this paper by examining a particular episode in earlier twentieth century economic history. A marked acceleration of productivity growth in U.S. manufacturing occurred after World War I, and was the main driver of the absolute and relative rise of the private domestic economy’s TFP residual. This discontinuity reflected the elaboration and adoption of a new factory regime based upon the electric dynamo, a general purpose technology (GPT) that brought significant fixed-capital savings while simultaneously raising labor productivity in a wide array of manufacturing operations. But, rather than offering a purely technological explanation of the productivity surge of the 1920s, a more complex conceptualization of the dynamics of GPT diffusion is proposed. This highlights both the generic and the differentiating aspects of U.S. industrial electrification in comparison with that of the contemporary UK. Explicit historical contextualization of the GPT concept also sheds further light on the puzzling late twentieth century productivity slowdown, and it points to some contemporary portents of a future phase of more rapid total factor productivity growth.

Reference: 031

Individual View

Authors: Liam Brunt

Jun 1999

Wheat was the single most important product of the British economy during the Industrial Revolution, being both the largest component of national income and the primary determinant of caloric intake. This paper offers new estimates of annual wheat production during industrialisation. Whereas other researchers infer wheat production indirectly from demand equations, we estimate production directly from output equations. Our estimates are based on a new time series model of wheat yields, encompassing both environmental and technological variables. We trace the impact of war and population growth on wheat yields, mediated through changes in the economic incentives for wheat cultivation. We test the accuracy of our new wheat output series by modelling the market price of wheat in England between 1700 and 1825.

Reference: 029

Individual View

Authors: Matthew Braham

Jun 1999

Volunteering by young adults for working in Third World countries on development projects emerged in Britain the late 1950s. Three decades later, the countrys largest volunteering sending agency, Voluntary Service Overseas, had sent more than 21,000 people abroad. The most common explanation for the emergence and growth of what is a small social movement is the affluence-value change theory, or Post-Materialism, which predicts that variations in the growth of the movement should vary positively with changes in wealth. This paper tests this prediction with a simple econometric model, and finds that this does not appear to be the case.

Reference: 030

Individual View

Authors: Antonia Taddei

Apr 1999

London clubs provided a means of establishing gentlemanly status and of making useful connections. Their number and membership was large. The paper begins with a quantitative overview of gentlemens clubs in London in the late nineteenth century using information contained in contemporary almanacs. The number of clubs and club members were characterised by two periods of intense growth, most significantly during 1860 to 1900, when total membership rose fourfold. This expansion, which exceeded that of the middle-class, was stimulated by the extension of democracy and the general political mobilisation during the Irish crisis in the 1880s. Political clubs became the largest type of club, and their characteristics and importance are examined in detail. A random sample of 200 individuals in Whos Who sheds light on the frequency of club membership among the elite. The growth of clubland was exhausted by the end of the century, in part because clubs devalued their own worth as a signal of gentlemanliness.

Reference: 028

Individual View

Authors: Oliver Grant

Dec 1998

The herringbone parlour, a mechanical milking technology, was invented in 1908, but took over 70 years to be adopted by the majority of British farmers. Among the reasons were the need to improve original designs, the need for complementary institutional changes such as management systems, new labour contracts and suitable herd sizes. These determinants are analysed by means comparison of regions in Britain, which also brings out roles for farmer age, capital constraints, resistance to change, and path dependence. A critical factor was the ability of regions which were late adopters to avoid investment in intermediate systems and to leap-frog the leaders. The paper concludes with a theoretical model of the innovation process.

Reference: 027

Individual View

Authors: Avner Offer

Nov 1998

Body weight has risen in defiance of health and appearance norms. The social epidemics of overeating and slimming were driven by market forces and the psychology of eating: restrained eating is easily disinhibited by stress. For men, the rise in body weight was associated with the decline of family eating and exposure to greater food variety. For women, the cult of slimming was associated with mating competition, driven initially by adverse sex ratios. Food abundance made a mockery of the rational consumer. Paradoxically, the costs of abundance fell more heavily on the poor, who have had less access to the resources of self-control.

Reference: 025

Individual View

Authors: David Stead

Nov 1998

This paper provides a case study of the parliamentary enclosure of Stanton Harcourt, Oxfordshire. A collection of nearly eighty letters reveals the often-acrimonious negotiations over the draft clauses of the enclosure bill, and the extent of the concessions needed to overcome opposition to enclosure. Rents on the manorial lords property in Stanton Harcourt after enclosure are adjusted to obtain the income actually derived from the land. These time-series are compared with three counterfactual paths for income had the land remained open. At best enclosure raised net rents received by an immediate and persistent 7%. At worst income would have been slightly higher had the land remained open. Under the conventional method of project appraisal, for the manorial lord the enclosure was 100% unprofitable in both the short and long run. Perhaps Stanton Harcourt is best seen as an example of enclosure driven by motives other than purely agricultural profits.

Reference: 026

Individual View

Authors: Federico Varese, Meir Yaish

May 1998

The rescue of persecuted minorities - such as the Jews in Nazi occupied Europe -is seen in this paper as taking place in a peculiar market. In such a market rescuers face at least two dilemmas. Firstly, they might be willing to help but be uncertain how to go about rescuing. Secondly, they might be unsure over the nature of the request to help. To make a mistake and help wrong person could be very costly.

Reference: 024

Individual View

Authors: Tim Leunig

Feb 1998

It has been argued that the additional cost of transporting ring yarn in the vertically and geographically specialised Lancashire cotton industry was sufficiently high to deter spinners from adopting rings. The absence of a transition to large scale vertically integrated plants is seen as a form of entrepreneurial failure. In this paper we use new evidence to show that the majority of yarn could have been woven within the district in which it was spun, and, further, that in such areas, the average distance between spinners and weavers was a matter of yards. Transport costs were no more important for these firms that for vertically integrated ones. This yields a testable hypothesis: vertically specialised firms located in this areas should have been as read to adopt rings as were integrated firms. We test this proposition and find it to be correct: co-located independent, vertically specialised firms were as likely to adopt rings as were vertically integrated firms. As such the industrys failure to move to large scale vertically integrated production cannot be characterised as a form of entrepreneurial failure.

Reference: 022

Individual View

Authors: Hans-Joachim Voth

Dec 1997

Witnesses accounts are used to analyse changes in working hours between 1750 and 1800. Two findings stand out. The paper demonstrates that the information contained in witnesses accounts allows us to reconstruct historical time-budgets, and provides extensive tests of the new method. It also emerges that the number of annual working hours changed rapidly between the middle and the end of the eighteenth century. Estimates of labour input are presented. These findings have important implications for the issue of total factor productivity during the Industrial Revolution.

Reference: 021

Individual View

Authors: Paul David

Nov 1997

The term path dependence (PD) here refers to a dynamic property of allocative processes, pertaining to non-ergodic stochastic systems -- those whose asymptotic distributions evolve as a function of the history of the process itself. PD is shown to be neither necessary nor sufficient for the existence of market failure, although the two properties may arise from common structural features. A variety of stochastic models are PD and yet exhibit diverse properties in regard to predictability and lock-in. The taxonomy of path dependence propsed by S. J. Liebowitz and S. E. Margolis (1995), along with the latters interpretation of lock-in and accidents of history are shown at best to be of limited usefulness in the study historical phenomena, and misleading as to the possible implications of PF for economic policy analysis.

Reference: 020

Individual View

Authors: Liam Brunt

Oct 1997

We estimate a model of wheat yields for eighteenth century England using village-level data. This is an entirely new approach to quantifying progress during the Agricultural Revolution and enables us to consider both environmental and technological inputs. We find that climate was a crucial factor but soil quality was much less important, thus throwing doubt on traditional explanations for England’s high productivity. Traditional technologies such as drainage were effective in raising yields, but the technological innovations of the eighteenth century were much more effective. We find that turnips and seed drills were by far the most important innovations, contrary to the received wisdom.

Reference: 019

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