Mass Migration, Commodity Market Integration and Real Wage Convergence The Late Nineteenth Century Atlantic Economy

Abstract: As part of a process that has been at work since 1850, real wages among the current OECD countries converged during the late 19th century. The convergence was pronounced as that which we have seen in the post World War Il period. This paper uses computable general equilibrium models to isolate the sources of that economic convergence by assessing the relative performance of the two most important economies in the Old World and the New -- Britain and the USA. It turns out that between 1870 and 1910, the convergence forces that mattered were those that generated by commodity price convergence, stresses by Eli Heckscher and Bertil Ohlin, and mass migration, stressed by Knut Wicksell. It turns out that offsetting forces were contributing to late 19th century divergence, a finding consistent with economic historians' traditional attention to Britain's alleged failure and America's spectacular rise to industrial supremacy. The convergence forces, however, dominated for most of the period.