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Article

Svante Prado and Jakob Molinder

The Swedish growth trajectory began in the mid-19th century as external demand for its staples added an important impetus to industrialization and structural transformation. Since then, GDP per capita has increased by a factor of 21, which means that GDP per capital has doubled 4.4 times. At the same time, the population has increased from about 3.5 million to 9.5 million. The manufacturing industry has been the outstanding force propelling the economy forward since the 1870s. It was early on based on the exploitation of the domestic supply of raw materials. From the 1890s, it was gradually producing products higher up in the value-added chain, manifested by the growth of the mechanical engineering industry and the emergence of the electro-mechanical industry. The share of manufacturing in employment terms peaked at about 35% in the 1960s but then declined to about 18% in the 2010s. Yet, the importance of it as a locomotive for economy-wide growth has not declined by nearly as much. Another principal characteristic of Swedish development is large public sector-spending, implying high taxes and ambitions welfare state arrangements. Much of the expansion in social spending occurred in the post-World War II decades by the emergence of the welfare state based on universal principles and income-related benefits. A third attribute of the Swedish economic history is far-reaching compression of incomes. Thanks to wide-spread unionization and centralized agreements between the major organizations in the labor markets, the road was paved for far-reaching compression of the wage structure, which occurred in brief episodes during the 1940s, the late 1960s, and the 1970s. The joint force of these compressions and the welfare state produced a remarkable flat income distribution by the early 1980s, testified by a Gini of about 0.2, perhaps unparalleled among developed countries. As in many other similar countries, the income distribution has widened since the early 1980s, and the other Nordic countries had lower Gini coefficients than Sweden by the mid-2010s. Migration has set a deep mark in Swedish society. Whereas the latter half of the 19th century witnessed a massive outflow of Swedes going to the United States, two different waves of immigration dominated population movements after World War II. The first wave comprised workers from Finland, former Yugoslavia, and South Europe seeking employment in the prospering labor markets of the post-World War II period. This wave ebbed out in the 1970s. The second one comprised mostly asylum seekers from conflict-ridden countries. It began in the 1980s, and it continues. Combined, these waves of immigrations have transformed the Swedish population from being very homogenous into a blend of different origins.

Article

Canada is one of the richest countries in the world. It stands above most countries in the Americas. It is also noticeably poorer than its closest neighbor, the United States, despite considerable geographic similarity. These two facts have been true since as early as the 17th century. Why? An understanding of the historical path of Canada’s economic growth can be acquired by focusing on three important gaps in living standards within Canada: First Nations versus the rest of Canada, French Canadians versus English Canadians, and Atlantic Canada versus the rest of Canada. These three gaps allow an understanding of the crucial role of institutions in determining why Canada is rich on a global perspective and why it is poorer than the United States. However, explanations as to why Canada grew faster than Latin America are more speculative.

Article

Aida Farmand and Teresa Ghilarducci

Most monopsony research leaves out the employer as an active agent. The cause of monopsony rests solely on the workers: Their idiosyncratic preferences, their lack of information, and their geographical isolation create the monopsony conditions. Employers are viewed as mainly passive and only choose to exploit their monopsony potential when the conditions allow. The theoretical passivity of employers leaves out a whole class of behaviors necessary to identify and understand the persistence of monopsony. For instance, the models consider gender as a monopsony factor because wives and mothers are presumed to have intensely inelastic labor supply functions. Women’s attachment to children and the children’s schools and to their husband’s locational decisions means women are less likely to leave a geographical area to pursue a competitor’s better offer. Again, it is the woman’s idiosyncratic choices that allow for monopsony exploitation. However, it is likely employers consciously use race and gender stratification to segregate and divide workers to create differential labor supply elasticities and, thus, create monopsony conditions to the firm. A firm would maintain practices that use race to allocate jobs and separate men from women workers to maintain divisions among the workforce. Moreover, government policies that make it difficult for workers to unionize, keep minimum wages low, and subsidize low-paid work through the earned income tax credit help employers create and maintain monopsony power among subaltern groups, non-White workers, and women. Future research on monopsony should focus on specific employers’ practices that create monopsony conditions such as providing firm specific childcare, perpetuating occupational segregations, limiting opportunities of promotion for women and non-White workers, and lobbying for the wage subsidy programs such as the earned income tax credit.

Article

A new world for Europeans and an ancient land for its Indigenous populations, Australia has provided resources that have sustained its inhabitants for millennia. For the past century the nation’s standard of living has been among the world’s highest. This has accompanied the transformation from an economic frontier to a staples-based economy and to a modern, industrial economy over 150 years. Although a fundamentally urban society, it has been the continued use of the country’s natural assets, especially its land, that has underpinned these changes. While reliant on protective barriers in the first half of the 20th century, the country’s ongoing development has always depended on the inflow of overseas capital, an openness to international trade, and an eagerness to receive new people. When these elements have fluctuated so too has Australia’s economy. The sources of capital, trade, and people have changed over time, but a willingness to follow ideas from overseas has persisted. Not every member of society has benefited from development, and long-term inequality has followed the rise, fall, and rise evident in many Organisation for Economic Co-operation and Development (OECD) nations. Although still a leading nation when measured on the Human Development Index, environmental constraints, increased global tensions, and climate change pose challenges for Australian’s living standards that will again require them to transform their economy.

Article

A change of government in 1784 started a number of reforms that became the foundation of modern Denmark. Right up until the Second World War, agriculture was the predominant sector in the Danish economy, and changes in this sector therefore determined the development in the Danish economy. These changes include the transformation from common villages to privately owned farms, starting in the 1780s; the change from cereal to animal production in the 1880s; and the movement toward a growing number of small farms from 1919 until the trend was reversed after 1960. The economic importance of the agricultural sector has declined over time, currently contributing only 3% of the gross domestic product (GDP), as economic history since 1945 has been dominated by the creation of an urban welfare state with a big public sector. As a small open economy, Denmark’s international relations have hugely impacted the overall economic development.

Article

Jari Eloranta and Jari Ojala

The Finnish economy has experienced a relative late growth and catch-up process in relation to many other advanced Western economies. During this growth period, Finland also experienced a rapid structural change from an agrarian society to a developed service society. In a small open economy, the export industries have played a vital role in this development. Over several centuries, the forest industries have had a dominating impact in exports, along with the metal industries; however, the latter, as well as the electronics industry, with Nokia as the flagship company, gained more importance in the late 20th century in aggregate exports. The egalitarian educational system has to a large extent been pivotal respective of this change in the industrial structure and also in the growth of services. The demographic changes underlying these processes have been focal in these development processes, namely, the steady population growth in the 19th and early 20th centuries, followed by migration to urban centers, especially during the latter part of the 20th century; and, from the turn of the millennium, the emerging challenges of the welfare society followed by the aging of the population.

Article

Between 1850 and 1920, during the Age of Mass Migration, more than 30 million Europeans moved to the United States. European immigrants provided an ample supply of cheap labor as well as specific skills and know-how, contributing to American economic growth. These positive effects were not short-lived, but are still evident in the 21st century: areas of the United States that received more European immigrants during the Age of Mass Migration have higher income per capita, a more educated population, and lower poverty rates. Despite its economic benefits, immigration triggered hostile political reactions, which were driven by cultural differences between immigrants and natives, and culminated in the introduction of country-specific quotas. In contrast to the concerns prevailing at the time, European immigrants eventually assimilated. The process was facilitated by the inflow of 1.5 million African Americans who left the rural South to move to northern and western cities between 1915 and 1930. Black in-migration increased the salience of skin color, as opposed to that of religion and nativity, as a defining feature of in- and out-groups of the society. This reduced the perceived distance between native whites and European immigrants, thereby facilitating the integration of the latter. European immigrants also had long-lasting effects on American ideology. Parts of the country that hosted more immigrants during the Age of Mass Migration have a more liberal ideology and stronger preferences for redistribution well into the 21st century. This resulted from the transmission of political ideology from (more left-leaning) immigrants to natives.

Article

Martin Karlsson, Daniel Kühnle, and Nikolaos Prodromidis

Due to the similarities with the COVID–19 pandemic, there has been a renewed interest in the 1918–1919 influenza pandemic, which represents the most severe pandemic of the 20th century with an estimated total death toll ranging between 30 and 100 million. This rapidly growing literature in economics and economic history has devoted attention to contextual determinants of excess mortality in the pandemic; to the impact of the pandemic on economic growth, inequality, and a range of other outcomes; and to the impact of nonpharmaceutical interventions. Estimating the effects of the pandemic, or the effects of countermeasures, is challenging. There may not be much exogenous variation to go by, and the historical data sets available are typically small and often of questionable quality. Yet the 1918–1919 pandemic offers a unique opportunity to learn how large pandemics play out in the long run. The studies evaluating effects of the pandemic, or of policies enacted to combat it, typically rely on some version of difference-in-differences, or instrumental variables. The assumptions required for these designs to achieve identification of causal effects have rarely been systematically evaluated in this particular historical context. Using a purpose-built dataset covering the entire Swedish population, such an assessment is provided here. The empirical analysis indicates that the identifying assumptions used in previous work may indeed be satisfied. However, the results cast some doubt on the general external validity of previous findings as the analysis fails to replicate several results in the Swedish context. These disagreements highlight the need for additional studies in other populations and contexts which puts the spotlight on further digitization and linkage of historical datasets.

Article

Claude Diebolt and Michael Haupert

Cliometrics is the application of economic theory and quantitative methods to the study of economic history. The methodology rose to favor in economics departments in the 1960s. It grew to dominate the discipline over the next two decades, culminating in the awarding of the 1993 Nobel Prize in Economics to two of its pioneers, Robert Fogel and Douglass North. Cliometrics has always had its share of critics, and some have blamed it for the diminished role that economic history has had in economics programs in the 21st century.

Article

Sumner La Croix

Hawai‘i became one of the last two major land areas on the planet to be settled when Polynesians from Tahiti and the Marquesas Islands navigated voyaging canoes to Hawai‘i in the 11th or 12th century. Settlers brought plants and animals needed to start taro farms modeled on those in their homelands and established chiefdoms using traditional norms of behavior and governance institutions from their home societies. Sometime round 1400, Hawaiians lost contact with the outside world and remained isolated for the next 350–400 years. During this period, competing states emerged, ruled by a sharply differentiated elite (ali‘i) and supported by agricultural surpluses sufficient to support religious and artisan specialists and construction of hundreds of monumental temples. Contact with the outside world was reestablished in 1778 and led to major demographic, economic, and political change: Exposure to outside diseases led to a massive decline in the Native Hawaiian population over the next 125 years; integration with global product markets transformed Hawai‘i’s economy; and warfare among competing states led to the emergence of a centralized monarchy after 1795 that incorporated and adapted some Western political institutions. In 1820, Protestant missionaries brought a foreign religion to Hawai‘i, helped develop a Hawaiian alphabet, and established mission schools that brought literacy to much of the population. A two-decade boom (1812–1833) in harvesting and trading sandalwood with American ships overlapped with a 50-year period in which hundreds of Pacific whaling ships visited Hawai‘i annually to hire Hawaiian sailors and purchase provisions and services. Sugar plantations spread from 1835, expanded rapidly during the U.S. Civil War, and fell back with peace in 1865. An 1876 trade treaty with the United States exempted Hawai‘i sugar firms from the high U.S. tariff on sugar, and they responded by expanding production tenfold by 1883, using immigrant labor from China, Portugal, and Japan. Problems with renegotiating the treaty led to a rebellion by a mostly Caucasian militia group in 1886 that culminated in the overthrow of Queen Lili‘uokalani in 1893. The United States annexed Hawai‘i in 1898 and established a colonial “territorial” government that persisted until Hawai‘i was admitted to the U.S. economic and political union in 1959 as its 50th state. Pineapple and sugar industries expanded under protection of U.S. tariffs and with employment of migrant labor from Japan, Europe, Korea, the Philippines, and Puerto Rico. Japan’s attack on Pearl Harbor in 1941 was followed by imposition of martial law and the buildup of a large U.S. military presence. The economy struggled after the war until the introduction of jet plane passenger service in 1958 prompted millions of tourists from the United States, Japan, and other countries to visit Hawai‘i each year. The tourism boom, institutional reforms of statehood, and population growth ignited an economic boom that would continue thru 1990 and modernize the economy. The 1990s saw economic contraction as Hawai‘i adjusted to changes in U.S. tourism and Japanese foreign investment. From 1990, periodic disruptions to tourism caused by recessions, security crises, and global pandemics punctuated otherwise moderate economic growth.