Labour's Reward: Real Wages and Economic Change in 19th- and 20th-Century Europe.

• Author: Whaples, Robert

For the past few years a fierce debate has raged about the trend in the real wages of Americans. Are American workers' wages forging ahead, as they have throughout so much of our history, or are they slipping behind? Policymakers, academics, and wage earners would like to know, but have had a great deal of difficulty in answering this question because of problems in accurately conceptualizing and measuring real wages. There may be a resolution to the debate, but it will involve spending more effort attempting to measure the components of the real wage index, such as reevaluating biases in the Consumer Price Index. Hand waving or taking official government statistics as gospel are not viable solutions.

In resolving the debate, we can learn several valuable lessons from the discipline of economic history. Economic historians have been forced to construct real wage measures from the ground up, so they realize that each piece of data and each assumption must be carefully scrutinized and rescrutinized when drawing conclusions. The essays contained in Labour's Reward are a fine example of this relentless weighing and sifting of evidence. The authors have painstakingly pieced together time series of nominal wages and earnings, cost of living and real wages for eight European countries (Britain, Germany, Norway, Serbia and Yugoslavia, Turkey, Belgium, the Netherlands, and Sweden). The focus is on the last half of the nineteenth-century and the first-half of the twentieth century, but many of the chapters go well beyond these bounds. Two concluding chapters examine historical patterns of wage dispersion in France and in Spain. The authors are to be praised. Their task is mind-numbing, but their careful judgment and patience have yielded a product with substantial positive spillovers.

The highlights of the book are Charles Feinstein's chapter on real wages in Britain, Michael Palairet's chapter on Serbia and Yugoslavia and Sevket Pamuk's chapter on urban wages in Turkey. The first provides a clear yet concise assessment of the vast literature already published on British wages and prices and constructs a new real wage series. Feinstein does not "anticipate further substantial amendments" [p. 27]. Palairet and Pamuk demonstrate considerable ingenuity in their "lonely heroic" [p. xi] forays into virgin territory. Palairet adjusts his index to account for the timing of earning and spending within each pay period during Serbia's hyperinflation...