Preindustrial society was characterised by vast uncertainties due to harvest failures and fluctuations in prices of basic commodities. These economic fluctuations had severe effects on the standard of living, especially for the poorer segments of the population, as shown for instance, by the increased mortality following economic crises. This article examines the extent to which migration could be used as a measure to deal with economic stress by sending individual family members away, or relocating the entire family. A micro-level approach is taken, where a longitudinal dataset at the individual level is used in the analysis of a rural community in southern Sweden for the period 1829–1866. The results show that landless people did not move in response to economic stress, most likely because of the lack of available alternatives and prohibitively high costs of long-range migration. Thus, migration does not appear to have been an effective way of dealing with economic stress in this preindustrial rural community.

The height of the French male population of the Ancien Régime is estimated, on the basis of military records, to have been about 162 cm in the seventeenth century. This extremely short stature implies that ‘the crisis of the 17th century’ had an immense impact on the human organism itself. The improvement in climatic conditions at the turn of the eighteenth century had an ameliorating effect on the human organism, increasing its size by nearly 4 cms within a span of 12 years. Improved weather had a beneficial impact on agricultural conditions as well as a direct effect on biological processes. The physical stature of men increased until the birth cohorts of the 1740s, to decline thereafter, in keeping with the European pattern, although the decline of the second half of the eighteenth century was not more severe than elsewhere in Europe. France was not suffering from a prolonged period of malnutrition of unusual severity, and the threat of a Malthusian crisis was mild compared to seventeenth-century conditions. Hence, the anthropometric evidence supports the notion that the French economic malaise was not a fundamental cause of the political turmoil. To be sure, there were very large social differences in the biological standard of living, which clearly fuelled the fires of revolution. The height of the French upper classes was 7 cm above average, but that, too, was standard for contemporary Europe.

Globalisation was a fact of life in Europe before 1913, but as trade shares increased, so did wage and employment instability. Faced by growing pressure from workers, national authorities established labour compacts – a packet of labour market regulations and social insurance programmes – that defended workers against the risks they faced in and outside the factory. The labour compact provided workers with insurance because it compressed wage structures. We construct an index of labour market regulations and social insurance schemes for seventeen European countries and find that the extent of the labour compact varied with the level of openness. We conclude that the labour compact gave workers reason to support free trade because it protected them from external risk. Contrary to the received view, globalisation before 1913 was compatible with state intervention. Our findings are consistent with Rodrik's and Agell's for the period after 1945.

Recent studies of European agricultural history have shown that, during the early phases of economic development, agricultural growth can occur in the absence of major institutional changes. This article extends such a conclusion – of agricultural growth without major institutional change – to the case of Portugal during the period from 1850 to 1950. Based on new indices for agricultural output growth and data on the use of inputs, we show in this article that Portuguese agriculture was not stagnant in that century and that output and labour productivity expanded rapidly, in particular in the decades from 1870–1900 and 1930–50. We propose an explanation for the positive performance of the agricultural sector which is related to the changing patterns in the use of land and in the product mix, and to the growth of domestic demand for agricultural produce.

This article aims to throw light on why inequality in the distribution of income in Sweden fell from the mid-1920s to the second half of the 1950s. A new database has been created by coding tax records and other documents for the city of Göteborg. In the analysis the Gini-coefficient and its changes are decomposed by income source. The information shows that in the mid-1920s income in urban Sweden was fairly unequally distributed. The compression of the income distribution came about as real income at the lower end increased rapidly, while the real income of the most affluent decile remained more or less constant. Much of the initial decrease in income inequality was due to capital income decreasing in average size and in addition becoming less extremely concentrated at the top of the income distribution. From the mid-1930s onward households paid ever larger shares of their income as income taxes which caused income inequality to decrease.

A rapidly growing literature in industrial economics and regional economics uses data sets of individual firms or regional firm creation rates to answer the central question: what makes entrepreneurs? Which factors encourage some people to set up their own business and create jobs, and what prevents potential entrepreneurs from doing so? This contribution explores the determinants of regional differences in firm creation rates by using a new data set of 4,036 individual firms from Southwest Germany around 1900. Agglomeration effects and earlier firm creations stimulate current firm creation. In addition, a small and medium firm environment allows the formation of specific human capital – another favourable factor for a dynamic firm creation process in some regions.

The study of economic growth is arguably the central object of economic history. Our most comprehensive measure of economic growth relies on historical national accounts (HNA). The theoretical underpinnings of present day national accounts have evolved since the first attempts by Gregory King in the seventeenth century and have now become standardised according to the rules of the UN's system of national accounts (SNA). Though grounded in economic theory the SNA system rests in many cases on quite arbitrary definitions that are far from obvious or involve theoretical inconsistencies, as has been pointed out for example by Eisner (1988) and Shaikh and Tonak (1994). This arbitrariness concerns such issues as how to draw the boundary between economically productive activities and forms of private and social consumption, how to account for non-marketed economic activities and how to handle the ‘services’ provided by durable goods.

Traditional explanations for Western Europe's demographic growth in the High Middle Ages are unable to explain the rise in per capita income that accompanied observed population changes. Here, we examine the hypothesis that an innovation in information technology changed the optimal structure of contracts and raised the productivity of human capital. We present historical evidence for this thesis, offer a theoretical explanation based on transaction costs, and test the theory's predictions with data on urban demographic growth. We find that the information-technology hypothesis significantly increases the capacity of the neoclassical growth model to explain European economic expansion between 1000 and 1300.

There is a general consensus among scholars that centralised wage bargaining played a key role in the ability of Sweden to maintain wage moderation in the early post-World War II period. Conventional wisdom suggests that it worked through one of two mechanisms: internalisation of the negative externalities associated with excessive wage settlements or implicit contracts that favoured cooperation between capital and labour over conflict. We contend, instead, that centralised wage bargaining was introduced because Swedish firms and unions adopted the Rehn-Meidner plan. In this environment, centralised wage bargaining was used to facilitate wage compression from below and promote labour release. Wage moderation then was a result of shifts in the labour supply. In the final section of the article we argue that excessive wage compression in the 1970s sapped the morale and effort of skilled workers, pushed down productivity and profits and eventually led to the demise of centralised wage determination.

The 1826 Banking Copartnership Act allowed unlimited liability joint stock banks to form freely for the first time. Such banks were criticised by Walter Bagehot because he believed that impecunious individuals would own their shares. As the 1826 Act crucially contained a post-sale-extended liability restriction, Bagehot's view reduces to whether or not this restriction was effective. This article tests the effectiveness of this restriction by using a simple finance model to measure the risk of the shares of limited and unlimited banks, which traded concurrently during our sample period. Using share price data from 1873 to 1888, obtained from the Investor's Monthly Manual, our results indicate that the perceived risk of the unlimited liability banks was greater, and after the general move to limited liability in 1879, perceived risk fell. Furthermore, we also find that, after controlling for size, the unlimited liability banks tended to have a smaller number of shareholders and stickier share prices.

The history of public finances in Portugal from the middle of the nineteenth century to World War I is distinguished by the pursuit of an ambitious programme of public investment in infrastructure, and by the negative financial consequences this elicited, culminating in the 1892 default. In this article we approach the Portuguese financial history of this period with a relatively new methodology for evaluating financial sustainability, which emphasises the inter-temporal nature of government budgeting. The results obtained allow us to quantify the distance that separated Portuguese finances from a sustainable path throughout the period. Although the generational imbalance of Portuguese finances at the time seems massive in the context of today's benchmarks, its economic and financial impact should have been more limited, given the government's relatively low weight in the economy and the favourable demographic pattern.

The article examines the behaviour of two leading English clearing banks, the Midland and Westminster, during periods of financial distress suffered by a sample of business clients during the early postwar decades. Such periods provide valuable insight into the nature of bank–business relationships at that time for, in a sense, bank reaction during periods of financial difficulty for client firms helps define the limits to bank support and commitment to such firms. The article examines the banks' behaviour within the context of a transaction bank model (as opposed to what might be termed a relationship bank model) and the results are compared with those of an earlier study by the authors of pre-First World War bank practice. The results show that the banks did operate many of the control mechanisms associated with transaction banking and that the proficiency of such controls ensured that the banks' interests remained reasonably secure even for the high risk loans under study. Importantly, however, the evidence also shows that the banks did not exercise a stark choice between, on the one hand, supporting clients while relying upon traditional control mechanisms, and, on the other, withdrawing support. In a significant number of cases, the banks were prepared to invest in gathering more information on a client's business, and in trying to influence the direction of that business. This suggests a more informed and interventionist approach by the banks in these cases compared to the findings in the pre-1914 study. For the sample of cases examined, it seems that while much of the behaviour of the two banks remained consistent with the transaction bank model, compared to our pre-1914 findings there was also a greater tendency towards a more flexible, ‘hands-on’ approach in extremis. In these cases, English bank behaviour was similar in some respects to that of the more interventionist European banks, and less like that predicted by the transaction bank model.

The evolution of the welfare state in the twentieth century has changed local public finance considerably. This article investigates determinants of local public spending in Norway since the 1930s with an emphasis on the fiscal year 1934–35. We document huge variation in local government spending in 1934–35. The disparities initiated several reforms in the 1930s with the aim of reducing the inequality. The changes in regional policy over time are illustrated by correlation coefficients between municipal spending and private income. The correlation is strongly positive in 1934–35, but is reduced over time, and has been negative since the 1970s. We find that the variation in spending between local governments is reduced over time mainly for two reasons. First, while the elasticity of municipal spending with respect to private income is fairly constant over time, the variation in private income has become smaller. Second, grants from the central government have become a larger part of the local governments' budgets and are to an increasing degree used for redistributional purposes.