Unit V: Real wages, inequality and globalization in latin america before 1940 (Williamson) Flashcards
What does the paper investigate regarding economic differences?
The economic differences between Latin American countries and between Latin America and industrialised nations before 1940.
This includes an examination of real wages and relative factor prices.
What type of data does the study use for its analysis?
A new database of real wages and relative factor prices for seven Latin American countries compared with data from Mediterranean regions, Britain, and the United States.
This data is crucial for understanding economic gaps.
What key argument is made about conventional GDP estimates?
Conventional GDP estimates are insufficient for answering questions about economic differences, necessitating the use of real wage data.
Real wages provide a more accurate measure of living standards.
What was the impact of the first globalization boom after 1870 on Latin America?
The paper investigates whether Latin American countries were able to exploit the first great globalization boom after 1870.
This includes examining changes in export shares and integration into world markets.
How did real wages within Latin America trend from the 1890s onward?
Real wages diverged until the 1890s and then began to converge, with stronger convergence in the 20th century.
This trend indicates changing economic dynamics in the region.
What does the paper say about Argentina and Uruguay’s wage-rental ratios?
Argentina and Uruguay experienced a decline in their wage-rental ratios due to the trade boom, suggesting rising inequality consistent with Heckscher-Ohlin theory.
This reflects the impact of trade on income distribution.
What role did migration from the Mediterranean play in Latin American development?
The paper explores the role of migration from the Mediterranean in Latin American development, finding no uniquely elastic labor supply in response to wage gaps.
This challenges previous assumptions about migration patterns.
What was observed about real wage growth in Latin America before World War I?
Real wage growth lagged behind GDP per capita growth across much of Latin America until World War I, suggesting rising inequality.
This trend reversed after the war, with real wages growing faster than GDP per capita.
What does the evidence suggest about the economic gaps between Latin American regions by 1914?
By 1914, huge economic gaps existed between the Southern Cone plus Cuba and the rest of Latin America.
This highlights significant disparities in economic development.
What significant change occurred in Latin American export shares between 1850 and 1912?
The share of Latin American exports in GDP rose from around 10% in 1850 to 25% in 1912.
This indicates increased integration into world markets during the globalization period.
Fill in the blank: Real wages within Latin America _______ until the 1890s and then began to converge.
diverged
True or False: The study concludes that real wage growth exceeded GDP per capita growth after World War I.
True
What does the paper conclude regarding the trends in Latin America before 1940?
The study identifies several stylized facts regarding convergence, divergence, and inequality trends that require further investigation.
These trends challenge existing theories of uniform development.
What is one limitation of using GDP per capita as highlighted in the paper?
It does not provide a direct measure of living standards compared to real wage data.
Real wages offer insights into income distribution and the actual earnings of individuals.
According to the paper, what factors influenced the economic gaps in Latin America?
Demographics, geography, and globalization.
These factors played significant roles in shaping economic conditions.
What trend in wage-rental ratios was observed in Argentina and Uruguay between the late 19th century and post-World War I?
The wage-rental ratio declined significantly, suggesting increasing inequality.
This aligns with the Heckscher-Ohlin theory regarding trade and factor prices.
What does the study suggest about the relationship between globalization and commodity prices?
Declining transport costs and commodity price convergence significantly impacted Latin America’s economic integration.
This facilitated trade and affected local economies.
What are the two distinct periods of strong economic convergence identified in the 20th century?
1910-1930 and 1970-1990.
These periods show significant changes in economic dynamics within Latin America.
What does the study propose as a research agenda?
To explain the observed convergence and divergence patterns within Latin America and the trends in wage-rental and wage/GDP per capita ratios.
This aims to deepen understanding of economic history in the region.
What does Williamson argue was the primary driver of globalization in 1912?
Falling transport costs rather than more liberal trade policies.
This perspective challenges the common belief that trade policies were the main factor in globalization.
What are two reasons for the preference of real wage data over GDP per capita data for Latin America before 1940?
- Better quality and wider sample availability of real wage data
- Wage rates provide insights into income distribution, which is crucial as people earn wages, not GDP per capita.
Real wages reflect actual purchasing power and living standards more accurately than GDP per capita.
Which countries had the highest real wages around the turn of the century?
- Argentina
- Uruguay
- Mexico
- Cuba
- Colombia
- Southeast Brazil
Argentina and Uruguay’s wages were close to or exceeding those of Great Britain, while Mexico and Cuba lagged behind.
What were the two periods of strong economic convergence within Latin America during the 20th century?
- 1910 to 1930
- 1970 to 1990
These periods were marked by significant reductions in income dispersion.
What trend did Figure 6 suggest regarding real wage convergence within Latin America between the mid-1890s and World War I?
Some real wage convergence occurred.
However, prior to this period, the data indicated divergence.
What does Heckscher-Ohlin theory predict about land-abundant countries experiencing a trade boom?
The demand for land and rents would rise relative to wages.
This prediction aligns with the steep decline in the wage-rental ratio in Argentina and Uruguay between the 1870s/1880s and just after World War I.
What general trend is shown in Figure 11 and Table 8 regarding the ratio of unskilled wages to GDP per capita in Latin America up to World War I?
A long, steep decline in the ratio, which flattened out or rose after 1915-1919.
This indicates changing dynamics in income distribution over time.
Fill in the blank: The concept highlighting how geographical remoteness and high transportation costs can hinder economic development is called _______.
Tyranny of Distance.
This concept is particularly relevant in discussions of Latin America’s economic history.
What is sigma-convergence?
A decrease in the dispersion or spread of income or wages across a group of economies or regions over time.
This concept is important for understanding trends in income inequality.
What was the impact of globalization on real wages and income inequality in Latin America during the first great globalization boom?
Globalization led to changes in real wages and income inequality, with varying effects across different regions.
The Heckscher-Ohlin trade model and the Lewis labor-surplus model may help explain these trends.
What role did international migration from Europe to Latin America play in the late 19th and early 20th centuries?
It significantly influenced labor markets and economic growth in receiving countries.
Wage gaps between the Mediterranean and Latin America drove migration patterns.
How did the wage-rental ratio in Argentina and Uruguay evolve between the 1870s and World War I?
It experienced a steep decline, suggesting rising income inequality.
This trend reversed after World War I.
What does the ratio of unskilled wages to GDP per capita (w/y) indicate about income inequality trends in Latin America?
It serves as a proxy for inequality, showing a long, steep decline before World War I.
This trend suggests that real wages lagged behind GDP per capita growth.
What are some key areas for future research regarding real wages, inequality, and globalization in Latin America before 1940?
- Reasons behind the two-step convergence in living standards
- Factors affecting the inverted U-shaped pattern of living standard gaps
- Trends in wage-rental ratios and wage/GDP-per-capita ratios.
Understanding these areas could provide deeper insights into Latin America’s economic history.
