Hostname: page-component-7bb8b95d7b-dvmhs Total loading time: 0 Render date: 2024-09-13T05:29:10.469Z Has data issue: false hasContentIssue false

Earnings Inequality in Nineteenth-Century Britain

Published online by Cambridge University Press:  11 May 2010

Abstract

Although debate has raged ever since Marx and Engels openly condemned British capitalism in the 1840s, little hard evidence has been brought to bear on the issue of economic inequality. This paper estimates British earnings distributions for four years in the period 1827–1901. The evidence supports the view of increasing inequality up to mid-century and a leveling thereafter. Coupled with newly available evidence on British eighteenth- and nineteenth-century wealth and income distribution, these estimates equip us to search for explanations. A strategy for modeling British inequality history is suggested.

Type
Articles
Copyright
Copyright © The Economic History Association 1980

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Engels, Friedrich, The Condition of the Working Class in England (1845Google ScholarPubMed; trans, and ed. W. O. derson and W. H. Chaloner, Oxford, 1958), p. 10.

2 Marx, Karl and Engels, Friedrich, The Communist Manifesto (1848; rpt. New York, 1930), pp. 34 36Google Scholar.

3 Karl Marx, Capital, Vol. I (rpt. New York, 1947), pp. 659–60; italics in the original.

4 Cited in SirWhittaker, Thomas P., The Ownership, Tenure and Taxation of Land (London, 1914), p. 44Google Scholar.

5 G[eorge] R. Porter, The Progress of the Nation, 2nd ed. (London, 1851); Robert Giffen, The Growth of Capital (1889; rpt. New York, 1970); Hirst is quoted in Whittaker, Ownership, p. 44.

6 Marshall, Alfred, Principles of Economics, 6th ed. (London, 1910), p. 687Google Scholar.

7 Hobsbawm, Eric J., Labouring Men: Studies in the History of Labour (London, 1964), p. 293Google Scholar.

8 Hughes, Jonathan R. T., “The Cadre Adonis-A Bourgeois Reactionary View,” Dept. of Economics, Northwestern Univ., Evanston, 111. (mimeo., n.d.)Google Scholar.

9 Brown, E. H. [Sir Henry] Phelps, The Inequality of Pay (Berkeley, Cal., 1977)Google ScholarPubMed.

10 Lydall, Harold, The Structure of Earnings (Oxford, 1968), p. 2Google Scholar.

11 Keynes, John Maynard, “Relative Movements in Real Wages and Output,” Economic Journal, (03 1939), 3451CrossRefGoogle Scholar.

12 Hartwell, Ronald Max and Engerman, Stanley, “Models of Immiseration: The Theoretical Basis of Pessimism,” in Taylor, Arthur J., ed., The Standard of Living in Britain in the Industrial (London, 1975), 189213Google Scholar.

13 Ashton, Thomas S., An Economic History of England: The 18th Century (London, 1955), p. 201Google Scholar.

14 Williamson, Jeffrey G., “Two Centuries of British Income Inequality: Reconstructing the Past from Tax Assessment Data,” Economic History Discussion Paper Series, Univ. of Wisconsin, Madison (mimeo., 04 1979)Google Scholar. The political arithmetic offered by Colquhoun, Baxter, and Bowley would appear to suggest the same. See Soltow, Lee, “Long-run Changes in British Income Inequality,” Economic History Review, 2nd ser., 21 (04 1968), 1719Google Scholar, and Williamson, Jeffrey G., “British Income Inequality, 1688–1913: Political Arithmetic and Conventional Wisdom,” Dept. of Economics, Univ. of Wisconsin, Madison (mimeo., 1978)Google Scholar.

15 Bowley, Arthur L., Wages and Income since 1860 (Cambridge, 1937)Google Scholar; Phelps Brown, The Inequality of Pay; Lydall, Structure; Routh, Guy, Occupation and Pay in Great Britain, 1906–60 (Cambridge, 1965)Google Scholar; Thatcher, A. R., “The Distribution of Earnings of Employees in Great Britain,” Journal of the Royal Statistical Society, Part 2 (1968), 133–70Google Scholar.

16 Brown, Phelps, The Inequality of Pay, p. 319Google Scholar.

17 , Bowley, Wages and Income, p. 42Google Scholar. Bowley's key estimates follow, where the larger percentage increase in the upper quartile and highest decile should be noted:

18 The text relies on the following data drawn from Appendix Table 2 below:

19 On this issue see the excellent discussion in Brown, Phelps, The Inequality of Pay, pp. 256–57Google Scholar, and the section below.

20 Bowley also offered estimates for 1860. In addition, he expanded the figures to include mining and agriculture. This procedure still fails to capture the service sector, but in any case, since Bowley felt that the resulting “deciles were subject to great error” (Wages and Income, p. 45), I have ignored them in the text discussion. The same is true of his “bold attempt” (p. 46) to include all incomes, though this result is included in my Table 3 where the “political arithmetic” estimates are reported.

21 As evidence of the lack of consensus, compare the following statements by two notable participants in the great inequality debate: “Generally, as the historical analyses of economic development have shown, an increase in per capita income has been accompanied by a more equal distribution of income” (R. M. Hartwell, “The Rising Standard of Living in England, 1800–50,” rpt. in Taylor, The Standard of Living, p. 95); “There is, of course, no dispute about the fact that, relatively, the poor grew poorer … and [the] rich and middle class, so obviously grew wealthier” (Hobsbawm, E. J., Industry and Empire [Middlesex, Engl., 1968], p. 91)Google Scholar.

22 The notation “1881/1886” simply indicates that the vast majority of the intra-occupation distribution estimates are based en 1886 data, while the employment weights and mean occupational earnings are based on 1881 data. Similarly for “1901/06.” For simplicity, throughout this paper 1881 = 1881/86 and 1901 = 1901/06.

23 Williamson, Jeffrey G., “The Distribution of Earnings in Nineteenth Century Britain,” Economic History Discussion Paper Series, Univ. of Wisconsin, Madison (mimeo., 12 1979)Google Scholar.

24 The form of the regression is simply

where is the inequality statistic for the jth group, Wj the group's mean annual earnings, and t=1881/86 and 1901/06. The results are as follows:

The data for are taken from Table 1, while those for Wj(t) are taken from Appendix Table 1. Male domestics are excluded throughout since income in kind is such a large share of their true income that nominal income estimates of W greatly understate true income.

25 Brown, Phelps, The Inequality of Pay, p. 257Google Scholar.

26 See Mincer, Jacob, Schooling, Experience and Earnings (New York, 1974)Google Scholar for a summary of the twentieth-century American evidence and Phelps Brown, The Inequality of Pay (chap. 8), for a summary of the twentieth-century British evidence.

27 Williamson, Jeffrey G., “The Structure of Pay in Britain, 1710–1911,” Economic History Discussion Paper Series, Univ. of Wisconsin, Madison (mimeo., 04 1979)Google Scholar; forthcoming in Uselding, Paul, ed., Research in Economic History, vol. 7 (Greenwich, Conn., 1981)Google Scholar.

28 See Phelps Brown, The Inequality of Pay; Brown, Phelps and Browne, Margaret H., A Century of Pay (London, 1968)Google Scholar; Brown, Phelps and Hopkins, Sheila V., “Seven Centuries of Building Wages,” Economica, 22 (08 1955), 195206Google Scholar.

29 K[enneth] Knowles, G. J. C. and Robertson, Donald J., “Differences Between the Wages of Skilled and Unskilled Workers, 1880–1950,” Bulletin of the Oxford University Institute of Statistics, 13 (04 1951), 109–27Google Scholar.

30 , Bowley, Wages and Income, pp. 4142Google Scholar.

31 Ibid., p. 41.

32 As E[dward] Hunt, H. has shown in Regional Wage Variations in Britain, 1850–1914 (Oxford, 1973)Google Scholar, regional wage variance was high even in the late nineteenth century.

33 The pattern of rising, then falling inequality over time has been labeled the “Kuznets curve” following Kuznets, Simon, “Economic Growth and Income Inequality,” American Economic Review, 45 (03 1955), 128Google Scholar.

34 Hunt, Regional Wage Variations.

35 Routh, Guy, “Civil Service Pay, 1875 to 1950,” Economica, 21 (08 1954), 201–23CrossRefGoogle Scholar. See also Williamson, “The Structure of Pay.”

36 Ibid.,

37 Williamson, “Two Centuries of British Income Inequality.”

38 Baxter, R. Dudley, National Income: The United Kingdom (London, 1868)Google Scholar; Bowiey, Arthur L., The Change in the Distribution of the National Income, 1880–1913 (Oxford, 1920)Google Scholar; Stamp, Josiah, British Incomes and Property (London, 1920)Google Scholar.

39 Kuznets, “Economic Growth.”

40 Mill, John Stuart, Principles of Political Economy, 3rd ed. (London, 1852), II, p. 1Google Scholar; italics mine.

41 J[ohn] Cairnes, E., Some Leading Principles of Political Economy Newly Expounded (London, 1874), pp. 6468Google Scholar; italics mine.

42 For a review, see Cain, Glen G., “The Challenge of Segmented Labor Market Theories to Orthodox Theory: A Survey,” Journal of Economic Literature, 14 (12 1976), 1215–57Google Scholar.

43 , Ashton, An Economic History, p. 235Google Scholar.

44 Brown, Phelps, The Inequality of Pay, p. 71Google Scholar.

45 , Marshall, Principles (8th ed.), p. 716Google Scholar; , Mill, Principles (1st ed.), II, p. 2Google Scholar.

46 , Routh, “Civil Service Pay,” p. 210Google Scholar.

47 , Hobsbawm, Labouring Men, p. 293Google Scholar.

48 Williamson, Jeffrey G., “The Sources of American Inequality, 1896–1948,” Review of Economics and Statistics, 58 (11 1976), 387–97Google Scholar; , Williamson and Lindert, Peter H., American Inequality: A Macroeconomic History (New York, Academic Press, forthcoming 1980)Google Scholar.