Factor price convergence in the late nineteenth century

Kevin H. O'Rourke, Alan M. Taylor, Jeffrey G. Williamson

Research output: Contribution to journalArticlepeer-review

Abstract

We examine a dramatic historical episode of factor price convergence in the late nineteenth century. Our focus is convergence between Old World and New, and the analysis centers on land and labor. Wage-rental ratios boomed in the Old World and collapsed in the New, moving the resource-rich, labor-scarce New World closer to the resource-scarce, labor-abundant Old World. We use econometrics and simulations to identify pro-convergence forces which include commodity price convergence, factor accumulation, and factor-saving biases. The results confirm that open-economy characteristics and international market integration are important sources of convergence.

Original languageEnglish (US)
Pages (from-to)499-530
Number of pages32
JournalInternational Economic Review
Volume37
Issue number3
DOIs
StatePublished - Aug 1996

ASJC Scopus subject areas

  • Economics and Econometrics

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