Broadberry and Gupta (2006) argued from wage and price data that the 'great divergence' in living standards between north-west Europe and the most advanced parts of Asia was already well underway before 1800, while conceding that the Asian wage and price evidence was not of the same high quality as the European. The open problem arising from the data limitations they documented: construct comparable, regionally disaggregated wage and price series for early modern Asia — Chinese urban money wages beyond the agricultural-labourer estimates they were forced to rely on, Indian regions beyond the northern/western and southern sites they covered — sufficient to pin down the timing, magnitude, and regional pattern of the divergence; and, in a strand developed by the subsequent literature, assess how far institutional differences (property rights, state capacity) explain the observed productivity gaps. Later literature built Chinese urban wage series (Allen et al. 2011) and China/India GDP comparisons (Broadberry, Guan and Li 2018/2021; Broadberry, Custodis and Gupta 2015), but the data-quality critique of Deng and O'Brien (2016) remains unanswered, wage-based and GDP-based chronologies still conflict, regional coverage of pre-1800 India and interior China is missing, and institutional causality is still contested. The problem remains open.

Background

The 'great divergence' denotes the emergence, between roughly 1500 and 1800, of a persistent gap in living standards and economic capability between north-west Europe and the most advanced parts of Asia — a central question of global economic history. The 'California school' of world historians (Kenneth Pomeranz, Prasannan Parthasarathi) held that leading regions of China and India remained as prosperous as Europe until about 1800, attributing Europe's later ascent to coal and New World resources rather than to superior productivity or institutions. Against this, Stephen Broadberry and Bishnupriya Gupta (2006) compared wages and prices across Europe and Asia. Their key analytical distinction is between the grain wage — how much of the staple food a day's pay buys — and the silver wage, the money wage expressed in silver, which confers purchasing power over tradable goods and services. They found that in advanced parts of India and China grain wages were comparable to north-west Europe, but silver wages were substantially lower, and argued that high north-west European silver wages reflected high productivity in the tradable sector rather than a monetary illusion; hence the divergence was already well underway before 1800. The comparison rests on real wages — nominal wages deflated by a cost-of-living index, often summarized as a 'welfare ratio', the number of subsistence consumption baskets (a fixed bundle of food, fuel, clothing, and housing) that a worker's annual earnings can buy — a method pioneered in this literature by Robert C. Allen. Two measurement traditions now structure the debate: the wage–price approach above, and historical national accounting, which reconstructs GDP per capita from output and population data sector by sector. The empirical foundations are contested on both sides: Judy Z. Stephenson (2018) showed that the London building-trade wage series that anchor the European side record contractor rates rather than the pay actually received by workers, while Kent Deng and Patrick O'Brien (2016) argued that the published Chinese wage data for the eighteenth century are close to 'unfounded guess work' because wages were often paid partly in kind (e.g. food allowances) and surviving records are sparse and unrepresentative. Broadberry and Gupta documented the thinness of their own Asian evidence base in the data discussion of their paper (Section III): the wage and price data available for Asia were 'not of the same high quality as the European data'; for China, because money wages were typically supplemented by substantial food allowances, they were 'forced to rely on estimates of earnings of Chinese agricultural labourers, including food payments'; and their Indian evidence covered only northern and western sites (Agra, Surat) and southern sites (Golconda, East Godavari, Madras, Cuddalore). They nonetheless pressed ahead with the comparison because 'the scale of the silver wage differences between Britain and Asia during the seventeenth and eighteenth centuries was so large that it is difficult to imagine how it could possibly be overturned by any conceivable correction'. Extending coverage to Chinese urban money wages beyond agricultural labourers and to Indian regions beyond the north/west and the south is therefore the natural completion of limitations the source documents. The role of institutional factors — the security of property rights (legal protection of ownership and contract) and state capacity (a government's ability to tax, enforce rules, and supply public goods) — in explaining the observed productivity differences was taken up as a research theme by the subsequent literature.

Problem Statement

The problem, arising from the data limitations that Broadberry and Gupta (2006) documented in their Europe–Asia wage and price comparison, has three jointly linked parts, all of which are required to resolve the problem, serving one objective — an empirically defensible account of when, where, and by how much early modern Eurasian living standards diverged, and why. First, the empirical core: construct and refine, to the same source-criticism standard and over the same benchmark years as the European data, wage and price series for Asia between 1500 and 1800. The minimum required target set is money-wage series for Chinese urban workers beyond agricultural labourers and wage and price series for Indian regions other than the north/west and the south, each with a matching price series; broader Asian coverage is welcome but not required. Pay explicit attention to payments in kind such as food allowances, so that the robustness of the claimed silver wage gap between north-west Europe and advanced Asia can actually be tested rather than asserted. Second, the chronology and geography these data must deliver: use the refined series to determine the timing of the great divergence in living standards, its magnitude, and its regional variation — which Asian regions and social groups were how far behind which European regions, and from when. Later historical national accounting programmes have produced GDP-based chronologies that conflict with the wage-based one; the source paper's own chronology claims rest solely on wage and price evidence. Third, the causal assessment developed by the subsequent literature: evaluate the role of institutional factors — the security of property rights and the capacity of states — in explaining the observed productivity differences, against rival resource-based and colonial explanations, stating explicitly which institutional factors are claimed to explain which productivity differences and how they are weighed against those rivals.

References

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