Real wages since 1820

Abstract

Wages are an important element of well-being, as they directly affect material living conditions. This chapter describes trends in real wages since 1820 for a wide set of countries derived with a standardized method that allows for comparisons over time and space. The main indicator is based on the real wage of an unskilled male labourer in the building industry. Its derivation is based on data on nominal wages adjusted by the price of a subsistence basket of goods. Strengths and weaknesses of this method are discussed. It is found that during the first half of the 19th century, real wages in large parts of the world were barely above subsistence, except for parts of Western Europe and in particular in the Western Offshoots. As in the case of GDP per capita, cross-country differences in real wages increased rapidly since 1820, and diminished in the late 20th century.