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Using new data on real wages, Caruana Galizia analyses the extent to which regions around the Mediterranean were part of the same labour market during the nineteenth century.



Chapter 1. Introduction

This book is about the movements of Mediterranean people within their own region and beyond during the nineteenth century. Economic historians have done a lot of research to explain why 55 million Europeans left for the New World and what the effects were.1 Historians have described migration around the Mediterranean.2 Until now, the two strands of literature had not yet been brought together to provide a systematic explanation of the Mediterranean experience. Further, the flows of Europeans to the New World were so large that they have obscured the within-Mediterranean movements of many hundreds of thousands of French, Italians, Spaniards, Greeks, and Maltese to Egypt and to France’s North African colonies. Important patterns of regional seasonal labor migration are also lost, for example, Italian construction workers’ migration to Egypt.

Paul Caruana Galizia

Chapter 2. Theoretical and Empirical Foundations

As transport costs decline relative to income levels, information flows improve, and institutional blockages are cleared, labor mobility increases and so there is a tendency toward labor market integration.1 Consequently, previously segmented labor markets integrate within and between countries.

Paul Caruana Galizia

Chapter 3. Historical Context

When did globalization begin?1 Some observers point to the 1990s, the decade when the Iron Curtain was lifted, what we now call emerging markets opened up and the Internet was popularized.2 World historians go further back in time. Frank emphatically argues, “There was a single global world economy with a worldwide division of labor and multilateral trade from 1500 onward.”3 Bentley pushes the date further back, claiming that even before 1500 “trade networks reached almost all regions of Eurasia and sub-Saharan Africa.”4 Others appeal to a particular year such as 1492, when Christopher Columbus chanced upon the Americas, or 1498, when Vasco de Gama completed a return trip around Africa to India.5 Economic historians are more skeptical. Menard’s analysis of long-run transport costs shows that between 1300 and 1800 “the international economy was poorly integrated” and that a transport revolution did not occur within the period.6

Paul Caruana Galizia

Chapter 4. Explaining Mediterranean Emigration

The standard references on nineteenth-century migration often vary in their quotes of total population overseas outflows: some authors quote that between 1821 and 1915 there were some 46 million population overseas outflows1 while some other authors put the number at 55 million.2 Emigration from Europe to the New World accounted for most of this movement. Many returned home, especially in the later nineteenth century, but this intercontinental mass migration remains unsurpassed. It affected the demography, and income and wealth distributions of both sending and receiving countries. While there were large flows of emigrants to Canada, Australia, and Latin America, most people went to the United States. Between 1861 and 1910, the United States took close to two-thirds of all gross recorded international inflows.3 Smaller but still substantial streams of migrant flow from Europe to closer destinations developed: from Spain to Algeria, for example.4 These intra-Mediterranean flows had effects at home and away, but remained just that—regional flows, substituting for access to the faster growing Atlantic economy.

Paul Caruana Galizia

Chapter 5. The Globalization of Trade and Labor Markets

Did tariffs on imports hold back the Mediterranean’s real wage convergence on the New World? The question can be addressed through two streams of research. O’Rourke and Williamson found that the reduction in transatlantic transport costs, through its effects on commodity price convergence, drove Britain’s real wage convergence on the United States.1 In later work, the authors asked whether this finding could be generalized to the European periphery, but lacked the data to go beyond speculation.2 For the poor labor-abundant and land-scarce Mediterranean, this theory predicts rising real wages (price of labor) and falling rents (price of land). In this chapter, I pick up their baton and test the hypothesis that countries with less protection from international trade converged more rapidly on the New World than those with more protection.3

Paul Caruana Galizia

Chapter 6. Emigration and Wage Inequality

Did emigration from the Mediterranean decrease real wage inequality? We saw in chapter 5 that commodity market integration can lead to international real wage convergence. In other words, it can explain a portion of the decline in wage inequalities between countries when factor mobility, or migration, is low. Though Mediterranean emigration to the New World was indeed lower than what we would have expected it to be, as we have seen in chapter 4, this does not mean it had no impact whatsoever on the Mediterranean. Further, there is migration within the Mediterranean to consider. In this chapter, I show that countries that exported the most workers (i.e., the factor rather than the commodity) had the lowest within-country real wage inequality levels.1 For an explanation, we can once again turn to Heckscher-Ohlin theory.

Paul Caruana Galizia

Chapter 7. Global Migration and Wage Convergence

Why didn’t the “Great Sea” globalize in the nineteenth century?1 To be sure, the Mediterranean was already far behind the developed parts of Europe by the start of the 1800s. In contrast to British preindustrial success in the seventeenth and eighteenth centuries, the Mediterranean between 1500 and 1850 became something of an economic “backwater.”2 In the later nineteenth century, things slightly improved relative to Britain in the eastern Mediterranean but deteriorated in the west.3

Paul Caruana Galizia

Chapter 8. Conclusion

What have we learnt from the foregoing analysis? First, Mediterranean countries that reacted to the globalization of commodity markets with tariff hikes experienced slower real wage convergence on the New World. Those that opened to trade, by will or by force, experienced terms of trade booms and faster real wage convergence. Second, domestic overpopulation kept unskilled wages low and wage gaps wide. This drove Mediterranean emigration, raising domestic unskilled wages and in turn reducing domestic income inequality. Lastly, while emigration from the northern Mediterranean to the New World was high, it was not high enough to facilitate the region’s integration with the global labor market. Emigration from the eastern Mediterranean and the Maghreb was high enough to allow for integration but the countries themselves comprised too small a part of the Mediterranean for the region to globally integrate in aggregate. Underlying these movements were declining transport costs and New World and northwestern European industrialization.

Paul Caruana Galizia


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