Was there an urban–rural consumption gap? The standard of living of workers in southern Sweden, 1914–1920by Christer Lundh

Scandinavian Economic History Review

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Scandinavian Economic History Review

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Was there an urban–rural consumption gap? The standard of living of workers in southern Sweden, 1914–1920

Christer Lundha a Economic History, University of Gothenburg, Göteborg, Sweden

Published online: 01 Jul 2013.

To cite this article: Christer Lundh (2013) Was there an urban–rural consumption gap? The standard of living of workers in southern Sweden, 1914–1920, Scandinavian Economic History Review, 61:3, 233-258, DOI: 10.1080/03585522.2013.794162

To link to this article: http://dx.doi.org/10.1080/03585522.2013.794162

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Was there an urbanrural consumption gap? The standard of living of workers in southern Sweden, 19141920

Christer Lundh*

Economic History, University of Gothenburg, Go¨teborg, Sweden

The aim of the paper is to qualify the meaning of an urbanrural wage gap by taking a household approach to the issue of standard of living, using household surveys for five worker groups in urban or rural Sweden in 1914/1920. The urban rural gap in terms of total household real earnings is estimated by including all the household income and using controls for household size and composition, deflated by separate urban and rural costs-of-living indices. To further assess the results, levels of household expenditure and the nutritional value of food are compared between the worker groups. The results indicate that the urbanrural earnings gaps were small or moderate, due to the higher cost of living in urban areas and the practice of payments in kind and home production in rural areas.

Some differences between urban and rural workers in terms of patterns of consumption and the nutritional value of food consumed can be attributed to differences in earnings, but a substantial part depended on the nature of the working loads, employment terms and housing conditions. These results thus modify the picture usually given in the literature on urbanrural wage gaps and income elasticity of food items.

Keywords: wage gap; consumption; urban and rural; household survey; nutrition 1. Introduction

Comparisons of the standard of living of workers in urban and rural areas, or in industry and agriculture, have long been made by economic historians and other social science researchers. In general, large differences have been found in employment terms and wages, one common result across periods and regions being that there is a substantial urbanrural wage gap.1 Even after control for urbanrural differences in terms of cost of living, a substantial and persistent wage gap tends to remain.2 Since economic theory predicts that workers will move from lower-paid jobs in the countryside to better-paid jobs in the city, which tends to level out wage differentials, the existence of an urbanrural wage gap has been interpreted as the *Email: christer.lundh@econhist.gu.se 1See, for instance, Squire, Employment (1981), 102; Clark, Conditions (1957), 52631;

Williamson, ‘British’ (1987), 64178; Williamson, ‘Structure’ (1982), 154; Williamson, ‘British’ (1987); Hatton/Williamson, ‘Wage’ (1991), 381408; Hatton/Williamson, ‘Integrated’ (1991), 41325; Hatton/Williamson, ‘Explains’ (1992), 26794; Hatton/Williamson, ‘Labour’ (1993), 89109; Heikkinen, Labour (1997); Margo, North-South (Feb. 2002); Mora-Sitja, ‘Labour’ (2007), i15677; Borodkin et al., ‘Rural/Urban’ (2008), 6795. 2Williamson, ‘British’ (1987), 60; Alston/Hatton, ‘Earnings’ (1991), 915; Hatton/Williamson, ‘Wage’ (1991), 401; Sicsic, ‘CityFarm’ (1992), 6856; Heikkinen, Labour (1997), 124; Mora-Sitja, ‘Labour’ (2007), i1634.

Scandinavian Economic History Review, 2013

Vol. 61, No. 3, 233258, http://dx.doi.org/10.1080/03585522.2013.794162 # 2013 Taylor & Francis

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O cto be r 2 01 4 result of a market failure, implying unbalanced economic growth and segmented labour markets or an equilibrium wage gap in accordance with the Todaro model.3

An alternative perspective is that the urbanrural wage gap would shrink even more, or even disappear, if it were measured more effectively. Hatton and Williamson claim, for instance, that comparisons of urbanrural differences in regard to standard of living should include all the income of the various household members and control for the size and composition of their households.4 This paper is influenced by this view, taking a household approach to the issue of an urbanrural earnings gap.