Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
Introduction
ECN 110B – World Economic History Since theIndustrial Revolution
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 1 / 40
Contact info, office hours
John Parman (instructor)Email: [email protected]: 1125 SSHOffice hours: M, W 3pm-5pm
Andrew Foote (TA)Email: [email protected]: 120 SSHOffice hours: TBA
Brock Smith (TA)Email: [email protected]: 132 SSHOffice hours: TBA
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 2 / 40
General Details
We will have a course website (smartsite.ucdavis.edu)
The syllabus, lecture slides, old exams and extrareadings will all be posted to the site (under the’Resources’ section)
Lecture slides will typically be posted the morning ofthe lecture
Try accessing smartsite at some point in the nextcouple of days to make certain you have access
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 3 / 40
Prerequisites
Officially, the prerequisites are ECN 1A, ECN 1B andECN 110A
You should have taken ECN 1A and 1B, I’ll assume acertain knowledge of economic terms and concepts fromthese courses
It is fine if you haven’t taken 110A (although the firstweek may be slightly easier if you have taken 110A)
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 4 / 40
Wait list, open campus, permission to add, etc.
The economics department does not issue PTA numbers
Everyone gets into the course through the waitlist
Be careful about switching sections, paying fees late,etc.
Open campus students should talk to me after class
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 5 / 40
Grading
Grades are based on two midterms (each worth 25% ofthe overall grade) and one final exam (worth 50%)
The final course grades will be curved in line with theecon department rules (the average GPA for the classwill be 2.7)
There are no makeup exams, everyone must take theexam at the regularly scheduled time
You have one week after an exam is first returned toraise any grading issues
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 6 / 40
Readings
The required text for the course will be “A Farewell toAlms” by Gregory Clark:
There will be additional required readings posted onSmartsite (these will be shorter articles)
I’ll also reference other readings that aren’t required butare worth exploring if any of the topics catch yourinterest
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 7 / 40
Schedule
Week of Monday Wednesday Friday
March 28 lecture lecture no classApril 4 lecture lecture lectureApril 11 lecture lecture Midterm 1April 18 lecture lecture lectureApril 25 lecture lecture lectureMay 2 lecture lecture Midterm 2May 9 lecture lecture lectureMay 16 lecture lecture lectureMay 23 lecture lecture lectureMay 30 Holiday lecture –
Final Exam: Monday, June 6, 8am-10am
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 8 / 40
What The Course is About
5
6
7
8
9
ln (real GDP)
ln (population)
ln (real GDP per capita)
0
1
2
3
4
5
6
7
8
9
ln (real GDP)
ln (population)
ln (real GDP per capita)
0
1
2
3
4
5
6
7
8
9
1790 1840 1890 1940 1990
ln (real GDP)
ln (population)
ln (real GDP per capita)
US Growth, 1790-2008
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 9 / 40
What The Course is About
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 10 / 40
What The Course is About
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 11 / 40
Was Anything Happening in the Malthusian World?
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 12 / 40
Plenty Happened in the Malthusian World
Major technological advances: fire, tools, metalworking, canals, windmills, explosives, domestication ofplants and animals, math, astronomy, physics, etc.
Exploration and trade across long distances occurred
Empires came and went
Some people became very, very wealthy but overallincome per capita did not rise
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 13 / 40
Explaining the Malthusian Trap
The first part of the course will be explaining thisMalthusian world
Why did income per person stay constant for so long?
Why weren’t technological advances leading toeconomic growth?
Why didn’t the rise of empires, international trade, etc.lead to increases in average income?
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 14 / 40
Escaping the Malthusian Trap
The Industrial Revolution marked a break from theMalthusian Trap
The second part of the course will be explaining whatthe Industrial Revolution actually was
We’ll cover the technological improvements but thesewere just a part of what happened
Other important features of the revolution:
Agricultural RevolutionIndustrious RevolutionDemographic Transition
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 15 / 40
Escaping the Malthusian Trap
Why was it England that led this break from theMalthusian world?
Why did the Industrial Revolution happen when it did?
Why didn’t it happen sooner in other parts of the world?
We’ll consider a variety of explanations:
InstitutionsNatural ResourcesGeographyEvolutionary
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 16 / 40
The Great Divergence
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 17 / 40
The Great Divergence
What were the benefits of industrialization for WesternEuropean countries?
Which segments of society benefited the most?
Why did other countries not benefit from the IndustrialRevolution?
How do we explain the divergence in per capita incomeacross countries since the Industrial Revolution?
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 18 / 40
Explaining the Malthusian Economy
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 19 / 40
Population in the Modern World
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 20 / 40
Population in the Preindustrial World
1500
2000
2500
3000ation (in
millions)
0
500
1000
1500
2000
2500
3000
0 BC
0 BC
0 BC
0 BC
0 BC
0 BC
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
0 AD
World pop
ulation (in
millions)
0
500
1000
1500
2000
2500
3000
1000
0 BC
6500
BC
4000
BC
2000
BC
500 BC
200 BC
200 AD
500 AD
700 AD
900 AD
1100
AD
1250
AD
1340
AD
1500
AD
1650
AD
1750
AD
1850
AD
1910
AD
1930
AD
1950
AD
World pop
ulation (in
millions)
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 21 / 40
Population in the Preindustrial World
LocationPopulation in
1300Population in
1800
Surviving children per
womanNorway 0.4 0.88 2.095Southern Italy 4.75 7.9 2.061France 17 27.2 2.056England 5.8 8.7 2.049Northern Italy 7.75 10.2 2.033Iceland 0.084 0.047 1.93
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 22 / 40
Explaining Stationary Populations
One of the key differences between the preindustrialworld and the modern world was that population sizewas pretty much static
It turns out that there is a very simple economicargument for why this was the case
The argument depends on three assumptions about howpreindustrial economies worked:
Each society had a birth rate increasing with livingstandardsEach society had a death rate decreasing with livingstandardsLiving standards decline as population increases
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 23 / 40
The Birth Rate Schedule
The birth rate is just the number of births per year perthousand people
For example, there were 4,059,000 births in the UnitedStates in 2000 and the US population was 281,421,906:
b2000 =4059000281421906
1000
= 14.4
We assume that in the preindustrial world, birth ratesrose with material living standards
Why? A wealthier family could better afford anadditional child, a healthier woman was more likely tohave a successful pregnancy, ...
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 24 / 40
The Birth Rate Schedule
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 25 / 40
The Death Rate Schedule
The death rate is just the number of deaths per yearper thousand people
For example, there were 2,403,000 deaths in the UnitedStates in 2000 and the US population was 281,421,906:
d2000 =2403000281421906
1000
= 8.5
We assume that in the preindustrial world, death ratesfell with material living standards
Why? Higher levels of consumption (better food,clothing, shelter, etc.) helps you live longer
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 26 / 40
The Death Rate Schedule
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 27 / 40
Stationary Population
Notice that for our US figures, the birth rate was 14.4births per 1,000 people per year and the death rate was8.5 deaths per 1,000 people per year
This means that each year, more people are being bornthan are dying so population must be growing
Recall that the preindustrial world had almost nopopulation growth
So in the preindustrial world, the birth rate roughlyequaled the death rate (the income per person at whichthis occurs is called the subsistence income)
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 28 / 40
Stationary Population
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 29 / 40
Stationary Population
But why a stationary population?
Because of the technology curve relating population toincome per person
With some resources fixed (for example land), themarginal product of an extra person is positive butsmaller than the marginal product of the previous person
This means that while total output increases aspopulation increases, it increases at a slower rate thanpopulation
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 30 / 40
Diminishing Marginal Product of Workers
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 31 / 40
The Technology Curve
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 32 / 40
The Malthusian Equilibrium
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 33 / 40
Moving to the Malthusian Equilibrium
Suppose we were at an income per person greater thanthe equilibrium level
Then births would exceed deaths leading to populationgrowth
As the population grows, we move up and to the leftalong the technology curve
This leads to lower income per person increasing thedeath rate and decreasing the birth rate
Things stop moving once the birth rate equals thedeath rate
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 34 / 40
Moving to the Malthusian Equilibrium
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 35 / 40
Moving to the Malthusian Equilibrium
Notice that equilibrium income per person had nothingto do with the level of technology
Equilibrium income per person is determined entirely bythe birth rate and death rate
The technology curve mattered for two reasons:
The downward slope told us how income per personwould change if the population was growing or shrinkingThe position determined the equilibrium population level
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 36 / 40
The Effects of a Change in Technology
Suppose that there is an improvement in technology (weinvent the wheel). What happens?
The advance in technology will shift the technologycurve to the right
In the short run (before population adjusts), this meansgreater income per person
Births will rise, deaths will fall and the population willgrow
The economy returns to the old income per person onlyat a new higher population
So an improvement in technology can allow for greaterpopulation density but doesn’t improve average income perperson
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 37 / 40
The Effects of a Change in Technology
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 38 / 40
The Effects of a Change in the Birth or Death Schedules
A shift in the birth or death schedules can changeequilibrium income per person. Suppose that the plaguecomes along, what happens?
The rise in disease will shift the death rate curve up(more deaths at any given income level)
At the current income per person, deaths will nowoutnumber births and the population will decrease
As the population decreases, income per person will riseuntil deaths once again equal births
The economy settles at a new higher income per personand a new lower population
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 39 / 40
A Shift in the Death Rate Curve
J. Parman (UC-Davis) World Economic History, Spring 2011 March 28, 2011 40 / 40