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Economic History Association

Real Wages and Standards of Living in the Ottoman Empire, 1489-1914Author(s): Süleyman Özmucur and Şevket PamukSource: The Journal of Economic History, Vol. 62, No. 2 (Jun., 2002), pp. 293-321Published by: Cambridge University Press on behalf of the Economic History AssociationStable URL: http://www.jstor.org/stable/2698182

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Real

Wages

and

Standards

of Living

in

the Ottoman

Empire,

1489-1914

SOLEYMAN

OZMUCUR

AND

UEVKET

PAMUK

Utilizing

a

large

volume

of archival

documents,

this

study

establishes

for

the

first

time the long-term

trends

in real wages

of

skilled

andunskilled

construction

workers

in Istanbul

and other

Ottoman

cities

in southeastern

Europe and

the Middle

East,

from

the second

half

of the fifteenth century

until

World War

I.

A

detailed

consumer

price

index

and nominal

wage

indices

are constructed

for the city

of Istanbul

for this

purpose.

These price

and wage

series

are then

inserted

into a

larger

framework

of

price

and

wage

trends

in

European

cities during

the

same

period.

uringthe last two decadeseconomistsandeconomichistorianshave

Jdevoted

much effort

o estimating

he

percapita

real product

of

differ-

ent countries,

and to

analyzing

trends

in the

gap

between

"leaders"

and

"fol-

lowers."'

We

know that

the

gap

is

large

today,

and

we can

infer from

the

growth

record

of both groups

of countries

that

it was

smaller-or

did

not

exist at

all-prior

to the onset

of

modern

economic

growth.

Recent

research

by

Angus

Maddison

and others

has confirmed

the

existence

of

a

gap

as

of

1820. We

have

also

learned that

the gap

between

developed

and

developing

countries as a whole widened not only in the era of the IndustrialRevolution

from

1820

to 1914,

but

also from

1914

to 1950.2

There

is little

information,

however,

about

the

period

before

1820.

How large

was this

gap

in 1750,

in

1600, or

in 1500?

These inquiries

inevitably

give

rise to questions

about

the

prevailing

trends

in

per

capita

incomes,

productivity,

and institutions

during

the early

modem

era,

not only

in

Western

Europe

but also

in

today's

devel-

oping

regions.

The

Journal

of Economic

History,

Vol. 62,

No.

2

(June

2002). ?

The Economic

History

Association.

All

rights

reserved.

ISSN

0022-0507.

Siileyman

Ozmucur

is Professor, Department

of

Economics, Bogazi,i

University,

Istanbul,

Turkey,

and

University

of

Pennsylvania,

Philadelphia,

PA 19104.

E-mail:

[email protected].

$evket

Pamuk

is Professor,

Department

of Economics

and

Ataturk

Institute

for Modem

Turkish

History,

Bogazi,i

University,

Bebek 80815,

Istanbul, Turkey.

E-mail:

[email protected].

This research

project

was

supported

by

the State

Institute

of Statistics

of

Turkey,

the Academy

of

Sciences

of

Turkey,

and

the

Bogazi,i

University

ResearchFund through

Projects

99HZ02

and

0

1

Z

0

O.

In addition

to these

institutions,

the authors

would

like

to thank

Figen

Ta?kln,

Nadir

Ozbek,

and

Bagi

Erten

for

valuable research

assistance.

Thanks

are also

due

to Robert

Allen for

sharing

his

data

and

insights. Earlierversions of this article were presented at the London School of Economics and at the

Third Conference

of the

European

Historical Economics

Society

held in

Lisbon,

October

1999.

The

authors

are

pleased

to

acknowledge

the helpful

comments

made

by

the

participants

of those

meetings,

especially

those by Jeffrey

Williamson

and Jan Luiten

van

Zanden.

They would

also like

to

thank

Jan

de Vries

and two anonymous

referees

for valuable

comments

and suggestions.

'

Abramowitz,

"Catching

Up";

Barro,

Determinants;

and

Maddison,

World

Economy.

See

also

Hanson,

"Third

World

Incomes";

and

Crafts,

"Gross

National

Product."

2Maddison,

"Comparison"

and WorldEconomy.

293



294

Ozmucurand Pamuk

With

the

possible

exception of a handful of countries,estimates of

per

capitaGDP for the period

before 1820

are

difficult

o construct

and unreli-

able. Moreover, t hasnot been possibleto constructdetailedestimatesfor

any

of the

developing

countries or

any period

before 1870. An

alternative

approachorstudying

he

gap

in

levels of

per capita

ncome or standards f

livinghas been to compare

real

wages

in

specific

occupations,

most

often

in

skilledandunskilled

constructionwork

n

urban

areas.Real

wage

dataare

of

far better

quality

han

per capita

GDP

estimates

especially

for

the

period

before

WorldWar

I,

and

they

are available or

a wider

range

of countries.

Infact, real wage seriesarevirtually he only solid

informationwe have on

standards f living in the developingcountries orthe periodbefore 1870,

if not 1914. In short,realwages continue o be the

most reliable source of

information bout

iving standards efore the veryrecentpast.

Although hey

cannot

be

described

as "national"

n

any sense,

urban

real

wage

series exist for many regions, and large

interregionaldifferences

within the same

country

are not

apparent

n

these series. Nonetheless,

real

wage

series

are

open

to valid

objections.

Even

if we

accept

the

representa-

tive

wage

as an

adequate

roxyfor

the

per capita

earningsof labor, his does

notmakeit a good proxyfor per capita ncome,which includes the returns

to

capital

and

and;

ongitudinal

nd

comparative

tudiesarefurther

ompli-

cated

by

the fact thatfactor

shareshave varied

greatly

over time and across

societies.

Moreover,

households ncomeswere often determined

y changes

in

employment evels,

and

in the

participation

ates

of

men, women,

and

children,and,

above all, by nonmarketncomes.

Despite

hese

qualifications,

he

historical

ink

between

wages

and he stan-

dardof

living

remains.

A

decline

n

realwages

did

result

n a decline n

house-

hold welfare,because each unit of laborcommanded ewer consumption

goods-or, alternatively,

ecausemore

abor

had to

be

supplied

o command

theaccustomed asket

of

goods.

Either

way,

hehousehold uffered

y

sacrific-

ing consumption,

onmarketncome, eisure,

r somecombination

f the hree.3

A

largepart

of our

knowledge

about

ong-term

rends

n

real

wages

dur-

ing

the

late

medieval

andearly

modem

periodsgoes

back

to

the vast

re-

search

ffort

undertaken y

members fthe

International

cientificCommit-

tee on Price

History (ISCPH),

established

n

1929. Most studies to

date,

including hose of theISCPH,have focusedon westernandcentralEurope.4

Arguably,

he most influential

project

n this

respect

has

been

that of

E.

H.

Phelps

Brown and

Sheila

Hopkins,

who constructed

rice

and

wage

series

for southern

England

over

seven centuries

beginning

n

1264.

The

Phelps

Brown-Hopkins

indings

werenotable ortheir

pessimism.They

confirmed

3Van Zanden, "Wages"; and de

Vries, "Between Purchasing

Power."

'

Amongst the classic studies

were those by Beveridge ("Wages"), Hamilton (American Treasure),

and Phelps

Brown and

Hopkins ("Seven

Centuries" and

Perspective).

For an overview of

the

main

results, see Allen, "Great Divergence."



Ottoman

Living

Standards

295

long-term

luctuations,

ut

did not

revealany

secular mprovement

n

urban

real wages

from

the fifteenth

o the mid-nineteenth

entury.'

n recent

de-

cades,however,evidencehasbeen accumulatinghatproductivity,tandards

of living,

and per

capita

GDPwere

rising in many

parts

of western

Europe

before

he

Industrial

Revolution.6

or his

reason,

researchers

n

recentyears

have

been reviewing

the old series

and

constructing

new ones

in order

to

reassess

the

history

of real wages.

Theyhave

alsobeen

debating

how

well

the real

wage

of urbanconstruction

workers

can

serve

as a proxy

for the

living

standard

f the population

at

large,and

whether

more representative

indices can

be constructed

with the available

data.Changes

n

occupational

structure ndincomedistributionmayhavebeentwo important ndrelated

reasons

behind

the

divergence

of GDP

per capita

and

realwages

in

western

Europe.

n

other

words,

t is

possible

that

he

wages

of

construction

workers

declined

elative

o other ncomesduring

hisperiod.

In addition,

households

may

have increased

heir

abor

supply

during

his

period.7

In contrast

o ouradvancing

tate

of

understanding

f

Western

Europe,only

a few real wage

series have been

constructed

o

date

for

cities

on the

Euro-

peanperiphery

and in other

continents.

The Ottoman

Empire

stood at

the

crossroads f intercontinentalrade, tretchingrom heBalkansand heBlack

Sea

through

Anatolia,

Syria,

Mesopotamia,

he

Gulf, Egypt,

and most

of

NorthAfrica

from

the

early

sixteenth

enturyup

to World

War

I.

At its

peak

in

the

seventeenth

nd eighteenth

enturies,

ts

population

xceeded

30

mil-

lion. One

might

have expected

hat

the economic

nstitutions hat

sustained

this

large,

multiethnic

entity

for so long

wouldbe

of interest

o economic

historians.

Unfortunately,

mainstream

economic

historians

have long

neglected

the

land

regime,

manufactures,

conomic

policies,

and the

daily

existenceof ordinarymen andwomen.As aresult, helongevityof the Otto-

man

Empire

remainsananomaly

and even a

mystery

or

many.

For

most

of its

six-century

xistence,

he

Ottoman

Empire

s best charac-

terized

as a bureaucratic, grarian

empire.

Its

economic

institutions

and

policies

were

shaped

to a

large

degree

by

the

priorities

andinterests

of

a

central

bureaucracy.

Recent literature

has

emphasized

that

the Ottoman

empire

did not

simply

and irreversibly

decline

after

the

sixteenthcentury.

On

the

contrary,

he

Ottoman

tate

and

society

showedconsiderable

ability

toadapt o changingcircumstancesn Eurasiaromthe seventeenth hrough

the nineteenthcenturies.

The central

bureaucracy

managed

o contain

the

many

challenges

it faced

with

pragmatism,

lexibility,

and

a

tradition

of

negotiation

o co-opt

and incorporate

nto

the state

the social

groups

that

rebelled

against

t. The Ottoman

tate also

showed considerable

lexibility

'Phelps

Brown and

Hopkins,

"Seven

Centuries"

and Perspective.

6

Maddison,

WorldEconomy;

Persson,

Pre-Industrial

Economic

Growth;

and de

Vries and van

der

Woude,

First Modern Economy.

7Van

Zanden, "Great Convergence," p. 12; and de Vries, "Industrious Revolution."



296

Ozmucurand Pamuk

not only

in

military

echnology,but

also

in

its

fiscal, financial,

andmonetary

institutions.Despite

wars and internal

conflict

from the 1770s through he

1830s, the Ottomansmanaged o regroupandsurvive into the modem era

with a

strong

central tate

and

many

of their

central

nstitutions

ntact,

while

many

of

their contemporaries

n

both Europe

andAsia collapsed.

Even before

the nineteenth

century,

he

Ottoman economy

was

well

linked

o

Europe

via

tradeacross heMediterraneannd

he

Balkans.Thanks

toresearch

n

recentdecades,

we now

have a

reasonably ood pictureof the

long-term

rends n

economic activity

n the OttomanEmpire.Most eco-

nomic historiansagree

that

the

sixteenthcenturywas a periodof demo-

graphicand economicexpansion,at leastin thecore regionsof the empire.

In contrast, he seventeenthcenturyhas been

characterized s a period

of

"crisis

and

partial

recovery"when population

and economicactivitystag-

nated

(or worse)

in

many parts

of the

empire.Contrary

o earlier

assump-

tions,

it

has been shown

that

theeighteenth entury

was a

period

of

relative

peace, stability,

and economicexpansion

hat

came to

an

end

with

the

de-

cades of

war,

fiscal

difficulty,

and

inflation

after

1770. Between 1850

and

1914,

the overalltrendwas

once

again

owards

imited

ncreases

n

average

incomes. Despitethe accumulation f valuableevidence for different ime

periods,

we are still

unable

to

compare

evels of per capita ncome in 1914

with those

in

1750 (or 1600

or

1500),

for

different

egions of the Ottoman

Empire

or for the

empire

as

a whole.8

Utilizing

a

large

volume of archival

documents,

his

study

will

establish

the

long-term

rends

n

wages

of

skilledandunskilledconstructionworkers

in

Istanbul

and other

Ottoman

ities

(including

Belgrade,Salonika,Edirne,

Bursa,Damascus,andJerusalem)rom he late

fifteenthcenturyup to

World

WarI. These trendswill offerimportantnsights nto the long-termperfor-

mance of the

Ottoman

economy. The price

and wage series will then be

inserted

nto a

larger

ramework

f

price

and

wage

trends

n

European

ities

during

he

same

period.

This

comparison

will

provide

new

and

important

evidence

regarding

tandards

f

livingandgrowth

n

the early

modem era.

It

will

also shed

light

on the

origins

and

evolution of a

gap

in

real

wages

between

developed

and

developing

countries.

PRICES

Sources

and

Methods

We

begin

with a

summary resentation

f the

results

of

a

study

of

prices

n

Istanbul ndother

eading itiesofthe Ottoman mpire rom hefifteenth

o the

twentieth

enturies.Additional etails

bout he ndicesare

presented

n

Appen-

8

Inalcik

and Quataert, conomic and Social History;or a recentoverview see Pamuk,Monetary

History,pp. 228-29.



Ottoman

Living

Standards

297

dix 1. Our

studyutilized

dataon theprices

of standard

ommodities food

and

nonfood

tems)

collected

rom

more

than6,000

account

books and

price ists

locatedn theOttoman rchivesnIstanbul. hefirst tepwasto constructhree

separateood-price

ndices.One

of these

wasbasedon

the accountbooks

and

prices

paidby

the

manypious

foundations

vaklf),

both

largeand small,

and

their

oupkitchens

imaret);

nother

ndexwasbased

on the account

books of

theTopkapi

alacekitchen;

thirdutilized

he

officially

stablished rice

ceil-

ings

(narh) or the

basic items

of consumption

n

the capital

ity.9

To the extent

possible,

standard ommodities

were used

in constructing

the

indices

in

order

to minimize the effects

of

quality

changes.

The

food

indices included the prices of ten leading items of consumption:flour

(mostly

wheaten),rice, honey,

cooking oil,

mutton,

chickpeas, entils,

on-

ions, eggs,

andfuel-grade

olive oil.

Amongthese,

flour,

rice, cooking

oil,

mutton,

olive

oil,

and

honeyprovided

he

mostreliable

ong-term

eries

and

carried

he highestweights

in our food budget.

In

cases

where the

prices

of

one or

more of these items

were not available

for a given year,

missing

values

were estimated

by an algorithm

hatapplied

regression

echniques

o

the

availablevalues.

The medium- and long-termtrendsexhibitedby the three food-price

indices are

quite

similar.

In

addition,

accountbooks showing

the private

purchases

by the

householdsof high-ranking

ureaucrats

lso point

to simi-

larlong-term

rends

n food prices

at the

retail level.10

The fact

that narh

prices

closely approximated

rices

paid by

the palace,pious

foundations,

and

private

ndividualssuggests

thatgovernment

ntervention

did not

alter

prices,

especially

in

the medium

andlong term.

It also pointsto

a high de-

gree

of government

pragmatism

n

economic

affairs.Historians

have

long

argued hat the permanentapplicationandenforcementof narh in urban

areas

was a

typical

example

of Ottoman

nterventionism

and

rigidity

in

defense of a traditional

order.

There

s,

however,

a

good

deal

of evidence

that he Ottomans

became

ncreasingly

onscious,

after

1600,

of

the

limita-

tions

of interventionism

n

economicaffairs.

They

earned hat

price

ceilings

9'Most of

the account

books

of the pious foundations

used

in this study are available

from

the

Maliyeden Miidevver

(MM), Bab-i

Defteri,

Ba?muhasebe

Kalemi

(B6M),

Evkaf Defterleri (EV),

and

Evkaf Nezareti, Haremeyn Muhasebeciligi (EV.HMH) Collections at the Prime Ministry Ottoman

Archives

(Ba?bakanlik

Osmanli

Ar?ivleri

[BOA])

in

Istanbul.

The account

books of the

Topkapi

Palace kitchen

are

available

from

the Bab-i

Defteri, Matbah

Emini (D.B$M.MTE),

Bab-i

Defteri,

Baamuhasebe

Kalemi (D.B$M)

Maliyeden

Miudewer (MM),

Kamil Kepeci

(KK),

Cevdet Saray (CS),

Maliye Nezareti,

Mesarifat

Muhasebesi (ML.MSF),

Bab-i

Defteri, Odun

Emini (D.B6M.ODE)

and

Bab-i Defteri, Istanbul

Agasi (D.B6M.ISA)

Collections

also at the

BOA, and the Dosya

(D)

Collection

at the Topkapi

Palace Archives.

The

narh lists were approved

by the local judges

(kadi) and

were taken

from

the Istanbul, Uskudar

and Galata Islamic court archives

in Istanbul.

A

complete

list

of

all

archival

documents used

in this

study

is

presented

on

year-to-year

basis

in the

appendices

of Pamuk,

Istanbul.

' Annual

values of these four

food-price

indices are not

provided

here

due

to limitations

of

space.

For further details see Pamuk, Istanbul, figures 2.2 and 2.3.



298

Ozmucur

and

Pamuk

thatdiverged ubstantially

rom he underlyingmarket ealities

couldnot

be

enforcedover long periods

of time.Forthisreason, nterventionism ecame

increasinglyselective. It was used primarily or the provisioning of the

capitalcity and the army,and for selected

commodities.Perhapsmore im-

portantly, fter1650

the

narhcame

to be considerednot aspermanent olicy

butan nstrument eserved

or

extraordinary

onditions uch as

wars,excep-

tional

difficulties

n the provisioningof

the

capitalcity,

or

periods

of

mone-

tary nstability.With

ncreasing iscal andmonetary

difficultiesandgrowing

price instability, he price

ceilings once againbecame

a regularfeatureof

Ottoman

urban ife from 1789 to

1850.11

Because he

palace

and

narh

prices

might be consideredofficial or state-controlledprices, this study gives

greaterweight

to the

prices

paidby

the

soup

kitchensand

the

pious founda-

tions.

The narh

prices

andthe retail

pricespaid

by

the

households

of

high-

level bureaucratswere not included

n the

final

index.

Since

the

availability

and

quality

of

price

observations

aried over

time

for most of the foodstuffs

n

our ist,theperiod1460-1860 was

divided nto

five

subperiods

and indices were calculatedseparately

for

each.

In each

subperiod

ome commoditieshad to be excludedfrom

the index due

to the

unavailability f priceobservations.

Based

on the

availableevidence

regarding

he

budget

of an

average

urban

consumer,

he

weighting

of food items in the overall indices was fixed be-

tween 75 and 80 percent.

The weightingof eachcommodity n the overall

index was then based

on the sharesof each in totalexpendituresof the re-

spective nstitutions.

Tocite two prominent xamples, he weightingof flour

varied

generally

between 32 and

40

percent

of food

expenditures

nd

24 to

32

percent

of

overall

expenditures, epending

on the fluctuations

n

prices.

Similarly, heweightof muttonvariedbetween 5 and 8 percentof the over-

all

budget.

Diets

of

private

households

n

the

capitalcity probably

differed

from those offered by the soup kitchens.At this

stage, however,

it is not

possible

to

approximate

he

private

diets more

closely.

The

following

commodity

basketwas used most

frequently

n

the

food

price

index:

11

kile

of flour

(288.6 kg)

4 kileof rice (51.2 kg)

9 okka

of animal-based

ooking

oil

(11.5 kg)

13 okka

of

honey (16.6 kg)

40 okka

of

mutton

51.2 kg)

0.2

kile

of

chickpeas

2.56 kg)

5 okkaof olive oil

(6.4 kg).

"

Pamuk, Monetary History, pp. 9-19.



OttomanLiving Standards

299

One

mportant

eason

why

the

weightings

of the individual ommoditieswas

kept constant over time was the unavailability

of consumerbudgets

for

differentpointsin time. It is likely,however, hatchanges n the commodity

compositionof the consumerbudgetwere small,

in partbecause

increases

in

average ncomes

were limitedduring hesecenturies.On the other

hand,

some

substitutionmust have occurredover time, away

from commodities

whose

prices rose

faster towardsthose whose prices declined

in relative

terms.It is thusreasonable

o expectthatourfixed-weights

ndex overstates

the

long-termprice

increasessomewhat,as

will be further

discussed

below.

In

the secondstep,various

nonfood

prices(of

soap,wood, coal,

andnails)

obtainedfrom a varietyof sources, most importantly he palace account

books, were addedto the price indices. From

thevariousaccountbooks of

the imperialpalaceit was possible

to obtain

ong-termprice

series on

two

types of woolen cloth:

the locally produced

Vuha,

and the

Vuha

Londrine

imported

rom

England.

However,

because the woolen cloth

described

n

palace

sourcesbelongedto moreexpensivevarieties,

cloth

prices

were not

included

n

the overall index

until

1860.12

Price data for

many

othertypes

of cloth have also been

collected,

but none of these are available

for long

periodsof time.A cost-of-living ndex shouldalso includethe rentalcost of

housing,

but an

adequate

eries for standard

ousing

is not available.

It is well known thatpremodemprices exhibited

wide short-term luctu-

ations due to harvest

conditions,

difficulties

in

transportation,

wars,

and

other causes.

In

the case of our

indices, however,

a number of factors

worked

to reduce such fluctuations.

First,

the

capital city

was

subject

to a

higherdegree

of

government

nvolvement

n

price formation.Secondly,

it

is

likelythatsoupkitchens andthe imperial

palacewere subjectto

a lesser

degreeofpricevariation hanwereprivatehouseholds.Thirdly, nprocess-

ing price observations rom archivaldocuments

we excluded prices

more

than 100

percent

higher or more than 50 percent

ower than the

value of

the

previous year,

unless the new price

level

was

observed

again

in later

years. Although most

of the excluded observations

reflected errors

n the

originaldocument,some of

them must

have

represented

actual

prices.

As

a result

we

do not have a

high degree

of confidence

in the

year-to-year

fluctuationsof our

indices,

but we are

quite

confident

about

the level of

pricesin the medium and longer term.

For

the

period

1860-1914,

data romthe

palace, vakif,

and

narh

sources

are

very

limited. For this reasonwe used

the detailed

quarterly

wholesale

prices

of the

CommodityExchange

of

Istanbul, overing

about

two

dozen

commodities,

and a separateseries

for

imported

cotton textiles. Indices

based

on

these

prices

were

then

linked

to those for the earlier

period,

with

2

We compared the

woolen cloth prices paid by

the palace with the prices of more ordinary varieties

worn by the janissaries, as given in Sahillioglu, "Yeni9eri (;uhasi."



300

Ozmucur

and

Pamuk

the help

of

detailed

data orboth

retail

prices

of individual ommodities

and

prices

at

the Commodity

Exchange

or 1860-1862

and

1913-1914.

Results

We have

thus obtained,

or the firsttime

forsoutheasternEurope

and

the

Near East,

detailed

andreliable

price

series for these four-and-a-half

entu-

ries

(Table

1).

The indices

show thatconsumerprices

in Istanbul

ncreased

by

a

total

of

about

300-fold from

1469

until WorldWar

I.

This overall

in-

crease

corresponds

o anaverage

ncrease

of 1.3

percent

per year,

endpoint-

to-endpoint,and1.1percentperyearfor the fittedline. They also indicate

that

Istanbul

xperienced

a

significant

wave of

inflation

rom

the

early

six-

teenth

o

the late

seventeenth

entury,

when

prices

ncreased evenfold.

This

is the

period

usually

associated

with the Price

Revolution.

The indices also

show,

however, hat

here

occurred

much

stronger

wave

of inflation

begin-

ning

in the 1770s

and lasting

into the

1860s, when

pricesrose

as

much

as

25-fold.

Most of

the

latter ncreases

were associated

with the debasements

that

began

in

the

1780s

and accelerated

during

the

reign

of

the reformist

sultanMahmud11 1808-1839). In contrast,priceswere relativelystable

from

the 1690s

to

the

1760s,

and

from he 1860s

to

1914.

(For

a

period-by-

period

review

of the

price

trends,

see Appendix

1.)

Obviously

there

were

many

causes

of inflation

during

he

early

modern

period,

as evidenced

by the large

literatureand the

extensive

debates

on

the

subject.

From

the

long-termperspective

offered

by

theseprice

indices

and

by

$evket

Pamuk's

recent study

of

the

Ottoman

currency,

however,

it

is clear that

debasements

or the

reduction

of

the

silver content

of

the

unit

of account by the monetaryauthoritieswere the most importantcause of

Ottoman

price

increases.13

In

fact,

even

though

nominal

prices

increased

about

300-fold

over these four-and-ahalf centuries, prices

expressed

in

grams

of silver rose

less than

threefold

(Table

1). There

were

medium-

term

movements in

the

latter

series: it

increased

from

1500

until

1640

during

he

period

of the PriceRevolution,

declined

until the

early

decades

of the

eighteenth

century,

and ncreased

againuntil

the middle

of

the

nine-

teenth century.

These

fluctuationsoccurred,

however,

around

a secular

trend thatwas rising only modestly. The so-called silver inflation thus

contributed

o the

changes

in

the

overall price

level,

but its

impactpaled

in relation

to that of

debasements.

Istanbulwas

chosen

primarily

ecause

pricedata

aremost detailed

or the

capitalcity.14

However, price data

from

the account

books

of pious foundations

13

Pamuk,

Monetary History.

14

Detailed indices on the prices of basic foodstuffs expressed in grams of silver, and the

terns

of

trade between foodstuffs and manufactured goods,

have

also been calculated from the Istanbul data

(Pamuk, Istanbul, ch. 2).



Ottoman

Living

Standards

301

TABLE

1

PRICESAND WAGES

N

ISTANBUL,

1469-1911

(decennialaverages)

Consumer

Price NominalDaily

Wages

Index

Real

Daily

Wages

(1469

=

1.0)

UnskilledWorker

SkilledWorker

(1489/90

=

1.0)

Period InAk,e

In Silvera

In

Ak,e

In

Silvera

In

Ak,e

In

Silvera

Unskilled Skilled

1469-1479 1.20

1.17

n.a. n.a.

n.a. n.a.

n.a. n.a.

1480-1489

1.30

1.02 4.9

3.3

9.8 6.6 0.93

1.04

1490-1499

1.09

0.85 4.7

3.1 7.7

5.2 1.06 0.96

1540-1549

1.60

1.00 5.3

3.5

9.6 6.3 0.86

0.92

1550-1559

1.64

1.25 5.0 3.3

9.7 6.4

0.78 0.86

1560-1569

1.86 1.32

5.9

3.8 9.3

6.0 0.83

0.73

1570-1579

1.99

1.41

5.6

3.4

9.9

6.0 0.68

0.66

1580-1589

3.35 1.47

8.1 3.5

12.4

5.4 0.65 0.53

1590-1599

4.45 1.46

11.7 2.6

20.7 4.6

0.51 0.50

1600-1609

5.43 1.81

13.9 4.0

22.5

6.5

0.62

0.56

1610-1619

4.44

1.47

14.2 4.1 22.8 6.6 0.76

0.67

1620-1629

5.56 1.54

15.0

3.4 18.3

4.1 0.84

0.57

1640-1649

4.37

1.34

15.2

4.2

29.5

8.2

0.79

0.84

1660-1669

5.82

1.56

19.5

4.4 29.9

6.8

0.81

0.69

1670-1679

7.06 1.69

18.0

3.7 23.0

4.8 0.71

0.50

1680-1689 7.46 1.79 21.8 4.5 33.4 6.9 0.73 0.62

1690-1699 7.96

1.21 26.2

3.4

36.9

4.8 0.78

0.61

1700-1709

6.05 0.92

23.8 3.1

38.0 5.0

1.02 0.90

1710-1719

6.87 1.03

25.2 3.3

38.2 5.0

0.92 0.77

1720-1729

6.98 1.06

26.4

3.5 42.3

5.6 0.97 0.85

1730-1739 7.62

1.10 30.6

3.8

44.8

5.6 0.94 0.76

1740-1749 9.93

1.39

32.5 3.9

51.1

6.2

0.91 0.79

1750-1759 10.1

1.30

32.4 3.6 58.6

6.6 0.76 0.75

1760-1769

11.1 1.23 30.3 2.9

50.8 4.8 0.70 0.64

1770-1779

17.8

1.93 38.7

3.6

71.2

6.7 0.52

0.51

1780-1789

17.2

1.58 56.9

4.7 113.4

9.4 0.86 0.94

1790-1799 24.5 1.50 80.2 4.1 148.4 7.7 0.84 0.84

1800-1809 34.7

1.91

114.4 5.3 217.7

10.0 0.84

0.88

1810-1819 49.5

1.86

202.6

6.9

401.2 13.7 0.95

1.04

1820-1829

62.8 1.26 275.9

5.0

475.4

8.9

1.13

1.10

1830-1839

130.1

1.12 608.8 4.5 1,054

7.8

1.11

1.05

1840-1849 181.0 1.70

717.2 5.9

1,238

10.1

0.99

0.95

1850-1859

240.5

2.32 935.3 7.8 1,599

13.3

1.38 1.30

1860-1869

285.7 2.76 964.7

8.0 1,716 14.3

0.81 0.80

1870-1879

265.6

2.56

941.4

7.8 1,989

16.6

0.86 0.99

1880-1889

238.1 2.30

944.0 7.9 2,061

17.2 0.91 1.04

1890-1899 235.6 2.27 1,063 8.9 2,308 19.2 1.12 1.35

1900-1909

220.9

2.13 993.5

8.3

2,150

17.9 1.10 1.31

1910-1914

294.2 2.84

1,861

12.6

3,450

26.6 1.30

1.51

a

Grams.

Sources: See the

text.

(similarly

btained

rom

he account

books of

pious

foundations

n

the Otto-

manarchives

n

Istanbul)

areavailable or

other

cities of

the

empire

as well.

Observations

or

a shorter ist

of commoditieswere used to construct

epa-




303

long-term

rends

n rental

prices

of

residential

housing

elsewhere

n

Euro-

pean cities

for which dataare available.

n

view of Istanbul's

growthas an

urbancenter,one should expectrents on residentialhousingto have risen

over

time.

Taking

nto accountpatterns

n housingownership,

we assumed

as a firstapproximation

hat rent

paymentson urbanhousing

doubled

in

relation o the overall

ndex, andthat

he shareof rents n the

averageurban

budget

rose fromabout

5

percent

o about10

percent,

betweenthe sixteenth

andearly

wentiethcenturies.

The inclusionof

rents nour ndex undersuch

an assumptionwouldincrease he

overall ndex

by 5 percent, herebyoffset-

ting

the inclusion

of cloth prices.In the absence

of anymeaningful time

series dataon rents,it is difficult o be more specificon this issue.

Finally,

we consider

he inclusionof

sugar

and

coffee

in our

price

index.

Istanbul

sugar prices declined by

about 50 percent

relativeto the overall

index

during

he sixteenthcentury,

and

by

an

additional50

percentduring

the period 1820-1860.

The available price

series for

coffee in Istanbul

tracked

the overall

index until the nineteenth century,

but declined by

about60

percentrelative

o

the

index during he period 1820-1

860.20Since

the

share

of

these two items

in

the

averageconsumerbudget

was limited

until 1860, however, our overall results would not change significantly.

We

estimatethat the inclusion of

these two items

in the

consumerbudget

would reduce the

terminal value of the

index

in

1914

by

no more

than

1

percent.21

RelativeCosts ofLiving

Thus

the

cumulative mpact

of

including

cloth, sugar,coffee,

andrents

n

the consumerbudgetwould be quite small. The impactwould be much

greater

n the relativecosts of living

of lower- andhigher-income

onsum-

ers,

however.

Since

cloth, sugar,

andcoffee

had

larger

hares n

the

budgets

of

higher-income

onsumers,

he decline

in their

prices

reduced

heir cost

of

living

in

particular.On

the

other hand,

the inclusion of

rent

payments

would tend to

raise

the costs

of

living

of lower-incomegroups

more

than

those facedby higher

income

groups,

since

the latterwere

likelier

to own

their

dwellings.

We thus estimate

that the inclusion

of these four items

would shiftrelativepricesin favorof higher-income onsumers.Withre-

spect

o

the two

groups

whose incomes

will

be

examined

n

the

next

section,

for

example,

we

expect

that the

expanded

price

index would widen

the

20

Before

the eighteenth century, sugar and coffee

were brought to Istanbul from Egypt. It

was the

arrival of imports

from Atlantic sources that

led

to the

sharp decline in the prices of both commodities

during the nineteenth century.

21 For the period 1860-1914 our

index includes prices of imported cotton cloth, sugar, and

coffee.

All price observations

used

in

this study, as well as the indices constructed

with them, are presented

in Pamuk, Istanbul.



304

Ozmucurand Pamuk

difference

between

the

purchasing

power

of skilled

and unskilledworkers

by

about

10

percent

or the entire

period.

Oneimportant ndrelatedcharacteristicf the Istanbulpriceseriesis the

important

ivergence

n relative

prices

over the course

of these

four-and-a-

half

centuries.

Prices of some foodstuffs

meat,

flour,

milk, eggs)

rose

400-

to600-fold

in

nominal

erms

and

our- o sixfold

in

silverterms)during

his

period,while prices

of other oodstuffs olive

oil, honey,

coffee,onions)

and

all

manufactured

tems for which

price

series are available

rose less than

200-fold. Since

the commodities

with

higher

rates of

price

increaseswere

essentials, hey

had a

higher

share nthe

budgets

of

lower-income

consum-

ers. Evenafterallowingforsomesubstitution wayfromcommoditieswith

morerapidprice

ncreases,we estimate

hatasa resultof these relative

price

movements

he overall

rate of inflation

aced

by

lower-incomeconsumers

was

higher,

and

he overall nflation aced

by higher-income

onsumers

was

lower,

thanthe

averagesprovided

by

our index.

If

we

had

adopted

eparate

consumer

budgets

for skilled and unskilledworkers,

for

example,

these

movements

n

relativeprices

would

have led, roughly,

o

cumulative

price

increasesthat were

5

percent

higher

for unskilled workers

and

5

percent

lowerfor skilledworkers.

When

we combine hese different

ffects,

we

arriveat a

cumulative

differ-

ence

of

about

20

percent

between

the

prices

faced

by

skilled

and

unskilled

workersduring

hese four-and-a-halfenturies.

n other

words,

we

estimate

thatthe overall

rate of inflation aced

by

unskilled

workers

was 10 percent

higher,andby

skilledworkers

10

percent ower,

thanthe averagesreported

in

our

consumer

price

index

in

Table

1.22

WAGES

For the second

part

of this

study, daily

wage data

were

gathered

from

morethan

5,000

accountbooks

for construction

nd

repairprojects

n

Istan-

bul

and

other

cities. These accountbooks contain

daily wages

for both

un-

skilled

and a

variety

of

skilled

construction

workers.

Urban

construction

work

was

a

relativelyhomogeneouscategory

of

labor

over time and

space.

Moreover,

n

contrast

to the

payments

made

to

other

employees,

urban

constructionworkersreceivedmuchof theirpayin cash ratherhan n shel-

ter,

food,

and

clothing.

As

a

result,

their

wages permitcomparisons

with

other

preindustrial

ocieties.

The construction ccountbooks

prepared

y

the

state

or

by pious

founda-

tions

usually

consisted

of a series of attendance ecords

isting

the work-

22

A recent study of prices

and inequality

in

Europe since

1500

(Hoffman

et al., "Real Inequality")

similarly argues

that relative price movements

favored higher-income groups and

increased income

inequality in Westem Europe from 1500 to 1800.



Ottoman

Living Standards

305

man's

name,

his

craft,

his rank

(master,

common laborer,

etc.)

and

his

wages.

Sometimes

the accountsprovide

a separate

record

for each day;

sometimesseveraldaysor weeksarecoveredby asingleattendanceheet.23

Information bout

the

length of theworkday

s rare in these records,

as is

information

n theprovision

of meals. For thatreason,we have

chosen to

ignore

those aspects

of the

daily

wage.

We

have also

decided to

ignore

the

seasonal

variations

n daily wages. In any

case, the overwhelming

majority

of the available

observationsbelong

to the construction

season (April

throughOctober

n Istanbul).

The

wages

for unskilled

workersreferredmostly

to one

type

of worker,

called rgadintheearlyperiodandren berafterabout1700. Incontrast,he

accountbooks

revealdailywagerates

ormorethan

a half-dozen

categories

of

skilled

construction

workers.

n

order o utilize

additional

nformation,

n

index

was constructed

ncluding

the wages of carpenters,

abinetmakers,

masons, stonecutters,

ditch-diggers,plasterers,

and

others. Based

on its

predominance

n

the

accountbooks,

the shareof carpenters

neccar)in the

index fluctuated

between 50

and 60

percent.

Figure

1

and

Table

1

present

realdailywage

series for skilled and

un-

skilled constructionworkers n Istanbul,obtainedby deflating he nominal

daily

wage

series

by

the

consumerprice

ndex.

It is not

easy

to

judge

to what

extent

daily

wages

were influencedby

institutional actors,

and to what

extent

by

market forces. However,

the fact that during periods

of

rapid

debasement

eal

wages initially

declined,

but soon

were

adjusted

upwards,

suggests

that

the

process

of

wage

formation

was

open

to market

orces.

Our

indices indicate that real

wages

of unskilled construction

workers

declined

by

30 to 40

percent

during

he sixteenthcentury.

They

then

re-

mainedroughlyunchangeduntil the mid-eighteenthcentury,afterwhich

they

increased

by

about

30

percent

up

to the

mid-nineteenth

entury,

and

then

by

another

40

percent

during

he late nineteenth

and

early

twentieth

centuries.On the

eve of

World

War

I,

real

wages

of

unskilled construction

workers

were

about

20

percent

above

their levels

in

1500.

But because

relativeprices

had shifted

in

favor

of

goods

consumed

by higher-income

consumers

during

hese

centuries,

andbecause he skill

premium

had

begun

to

rise

late

in

the nineteenth entury, y

1914 the

real

wages

of skilled

work-

ers stood at more than50 percentabovetheir evels in 1500.

23

Most of the account

books of the pious foundations

and the state used

in

this study

are

available

from the Maliyeden Mudewer

(MM), EvkafNezareti,

Haremeyn Muhasebeciligi (EV.HMH),

Evkaf

Defterleri (EV),

Bab-i

Defteri, Baamuhasebe Kalemi (D.B$M),

Bab-i

Defteri,

Bina Emini

(D.B$M.BNE)

and Maliye Nezareti, and Mesarifat

Muhasebesi

(ML.MSF) collections in the BOA

archives

in

Istanbul. Pamuk (Istanbul,

appendices

7-10) provides a full list of the archival

sources

on

an annual basis, as well as the

nominal daily

wages for each wage category in the

form of annual

averages for Istanbul and other

cities. Many of

the account books also included

lists and prices of

materials purchased,

such as iron, lime, and

nails, the last of which

was utilized

in

the construction

of

the price indices.



306

Ozmucurand Pamuk

3.5

Skilled

3.0 x Unskilled

30-Year Moving Averages,

Skilled

2.5

-

30-Year Moving Averages, Unskilled

2.0

1.0

0.5

Nx

x

#

0.0

.. . . . . .. . . . . .

1450 1500 1550 1600 1650 1700 1750 1800 1850

1900

FIGURE

REAL DAILYWAGEOF CONSTRUCTIONWORKERS: STANBUL, 1489-19 14

(1489/90 [unskilled] 1.0)

Sources:See the text.

When we take into account he differential mpactof the items excluded

from our price indices, as well as the differential mpactof the more rapid

rise in the prices of essentials,we mustadjust he cumulative osts-of-living

increasesof skilled andunskilledworkersby a further 1 0 and+10 percent,

respectively. (See

Appendix

1 for a period-by-period analysis of the trends

in realwages.) These adjustmentso the series in Figure 1 and Table 1 give

a betterview of trends n the wage premium or skilled labor.After declin-

ing duringthe sixteenth and seventeenthcenturies,the wage differential

began to increase n the second half of the eighteenthcentury,reaching

ts

peak on the eve of WorldWar . Not only changingdemand

but also decline

in supply(due to the emigration f skilled construction rtisans)must have

contributed o this trend.

The purchasing ower of the dailywages of both classes of workerwere

reasonably igh during hese four-and-a-halfenturies.During he sixteenth

centuryanunskilledconstructionworker ouldpurchasewith his dailywage

8 kg of bread, or 2.5 kg of rice, or more than 2 kg of mutton. The daily

wages of skilled workers were 1.5 to 2 times higher. At these levels of pay,

skilled

construction workers must have enjoyed standards of living well

abovethe average or the populationas a whole, and

also

above

the

average



Ottoman

Living

Standards

307

of

the urbanareas,

even

if

they

worked

fewer

than 200 daysper year.

For

purposes

of international omparisons,

t is also

possible

to

express

daily

wages in Istanbuland otherOttomancities in gramsof silver simplyby

multiplying

he

nominal

wages

by

the

silver

contentof the Ottoman

ak

e.

Around1500,

for

example,

daily

wages

of unskilled

construction

workers

in

the

capitalcity

equaled3.4 grams

of

silver;

hose

of skilled

construction

workers

equaled

6.6

grams

of silver (Table

1).

Data

were also

collected

on

thedailywages

of constructionworkers,

both

skilled

andunskilled,

n other

Ottoman

ities

around he eastern

Mediterra-

neanand the

Balkans

forthe

same period

1490-1914.

These

observations

were obtainedfrom the accountbooks of pious foundationsoperating n

these cities,

and

are available

romthe

Ottoman

archives n Istanbul.

They

showclearly

thatnominalwages

in

otherOttoman

ities also

increasedby

more than

300-fold

during

his

period.24

In orderto establish

whether

there

was

any

relationship

between daily

wages

in

the

capitalcity

and

hose

in

second-tier

urban enters

of the empire

(Bursa,

Edirne,

Belgrade,

Salonika,

Damascus,

erusalem,

nda

few others),

we regressed

w1

wo

(the

ratio of

nominal wages

in Istanbul

o nominal

wages in othercities) on the timetrend,usingdatafor each yearin which

observations

were

recorded or both

Istanbuland

any

other

city.

Our sepa-

rateregressions

or

the

wages of

skilled andunskilled

workers,as

well as a

composite

wage

definedas

a

weighted

combination

f

the

two,

indicate hat

the

null

hypothesis

of an intercept

of 1.0

for

w,

/

wo

cannot be rejected.

Moreover,

the

slope

coefficient

is

not significantly

different from

zero,

indicating

no discernible

ime trend

n this ratio.

SHORT-AND LONG-TERMDETERMINANTSOFREAL WAGES

In

the short

and

medium erm,

hemost mportant

etenninants

f Ottoman

realwages

were changes

n

prices

andthe

speedwith

which

nominalwages

adjusted

o them.

Because his adjustment

as

slow,price

shocks

ed to

fluc-

tuations

n real

wages.

Consumer

prices

exhibited

arge

short-term

luctua-

tions

due to harvestconditions,

difficulties

n

transportation,

ars,

andother

causes.

The

most

important

ause

of

changes

n the

price

evel,however,

was

debasement.Evenif pricesdid not risequickly,becauseof a specieshortage

or someother

eason,

ong-distance

radeactedas

theultimate

qualizer.

rice

adjustments

fter

a

debasement

ended o be

more

rapid

he more

open

the

economy,

and

the more

frequently

ebasement

was resorted

o.

Recentresearch

has shown

that he urbanpopulation

and some

segments

of

the

countryside

were

alreadypart

of the money

economyby

the

end of

the

fifteenth

century.

Even

more

significantly,

here occurreda

substantial

n-

24

Pamuk, Istanbul, figures 5.1-5.4 and appendix table 9.



308

Ozmucurand

Pamuk

crease

n the use of money during

he sixteenth

century,

because of both the

increasedavailability

f specie and

he commercializationf

the

ruralecon-

omy.The evidencefor thisimportant evelopment omesfrom a numberof

sources. First, recent

researchhas pointedout thatpopulationgrowth

and

urbanization uring

he sixteenthcenturywereaccompaniedby

the

growth

of economic linkages between urban

and

rural

areas.

As

a result, there

emerged

n

the

Balkans and

in

Anatolia an intensive

pattern

of

periodic

marketsand market

airs, where peasantsand larger andholders

old part

of theirproduce o urbanresidents.

These marketsalso

provided

an impor-

tantopportunity

or nomads o comeinto contact

with

peasants

and towns-

people. Largesectorsof the ruralpopulation ameto use coinage,especially

thesmall denominations f silver

ak( e

and he copper

mangir,through heir

participation

n

these markets.25

Secondly,

mall-scalebut ntensivenetworks f credit elations

developed

in

and around

the urban centers

of

the Balkans,

Anatolia, and probably

elsewhereduring

he same period.Evidencefrom thousands

of courtcases

in

these towns and cities involvinglenders and borrowers

eave no doubt

thatthe

use

of

credit,

small

and

large,

was

widespreadamong

all

segments

of urbansociety andpartsof thecountryside. t is clearthatneither he Is-

lamic

prohibitions

on

usury

nor the absenceof formalbanking

nstitutions

prevented

he

expansion of credit

n

Ottoman ociety during

he sixteenth

andseventeenth enturies.

Thirdly,

he provincial aw codes,

most of which

were ssued

between

he

mid-fifteenth nd

he mid-sixteenth enturies, how

very clearly

that

for every province

the

Ottoman

tate issued a long list of

activities that were

subject

o

taxation,

and the rate to be assessed on each

of

them. These

codes

point

to

an

economy

with

strong

urbanandrural

ink-

ages, considerablemarketorientation,and frequentcollection of small

amounts

of

cash taxes

from

artisans,

merchants, omads,

and

peasants.

The

availability

nd

use of

coinage

declined

during

he

secondhalf of

the seven-

teenth

century,

but increased

again

during he eighteenth.26

As

a

result,

debasement ad

animpacton virtaally

all

groups

n

Ottoman

society;

and each

group,

n

turn,adapted

o

it.

Court

ecordsmake

clear

that

mostmen and

women,

both

urban

ndrural,

were

clear

about he

distributional

consequences

f

different

ways

of

dealing

with

the

coinage.

In

general,

all

persons acing uture bligations xpressedn theunitof account-most impor-

tantly,

borrowers

ndtenants

paying

ixed rents

n

cash-stood

to

gain

from

debasement.

Conversely,

hose

who

expected

o

be paid

fixed

sums-notably

bureaucrats,anissaries,

nd

wageearners-stood

to

lose

from

debasement.27

25

Faroqhi, "Early History,"

"Sixteenth Century Periodic Markets," and "Rural Society."

26

Pamuk,

Monetary History,

pp. 74-82.

27

There existed a large overlap between the guild

members who were wage eamers and the

janissaries, after the latter

began to moonlight as artisans and shopkeepers

in

the seventeenth

century

(ibid., pp. 55-58, 193-200).



Ottoman

Living

Standards 309

We examined he short-and

long-term

changes

n real

wages through

a

time-series

analysis

of

our

price

and

wage

indices. For

the

purposes

of this

analysis themoretechnicalaspectsof which arepresentednAppendix2),

we utilized a

compositewage defined as

C

1S+ 2U

(1)

3

whereS

is the

daily wage

of a skilledconstruction

worker

and

Uis

the

daily

wage

of

an unskilled construction

worker.

Our

results indicate that

in re-

sponse

to

debasements,

both

prices

andnominal

wages adjusted

with

a

lag.

However,becausetheadjustmentf nominalwageswas slower than hatof

prices, debasements

ed to declines

in

realwages

in

the short and even

the

medium erm.

These results

help explain

he

unpopularity

f-and

the

often

strongpolitical oppositionto-debasements

among

the urban

population,

especially

n the

capital

city.

For

the

longer term,

it would

be

best to

investigate

he determinants f

realwageswithin the framework

f supply

anddemand or laborand a real

wage equation.One

would

expect

that

changes

n the

size

of the

laborforce

would be

an

important

determinant

f the

long-termchanges

in

the real

wage rate, especially

in

the

early

modem

period.28 pecifically,

one

would

expect

that

strong population

growthduring

he sixteenth

century

would

tend to

depress

real

wages,

whereas the

depopulation

of the seventeenth

century

would have

the

opposite

effect.Yetnone of the

dummy

variables

we

employed

o reflect these

demographic

rendswere

statistically

ignificant

when inserted nto

the

real-wageequation.

t

is of course

possible

that our

knowledge

of the

prevailingpopulation

rends

in

different

subperiods

s

faulty.29

It is

likelier,

however,

that

the

population

variables

were

over-

whelmed

by

the

powerfulprice

and inflationvariable.30

t

is also

possible

that

our

regressionmodel

is

misspecified

n

some

way,

or

that

changes

in

population

did not

have

any impact

on

Ottoman

eal

wages;

but

we do

not

attach

high degrees

of

probability

o

these

explanations. Further

details

of

the

real-wageequationare

presented

n

Appendix2).

The

only

other

variablethat is

statistically ignificant

n

our

real-wage

equation s the time trend(t). Itscoefficient ndicatesa long-termupward

28

We are inspired here by

a

similar study

of the

long-term trends

in

English

real

wages

undertaken

in Lindert, "English Population."

29

Annual population series are not available

for the Ottoman Empire, or for any part of it, for the

period before 1850. Instead, we have some estimates of questionable quality for different points

in

time.

On

the basis of the

latter,

we are

certain

that the sixteenth century was a period of relatively high

population growth. In contrast, 1580-1700

was a period of stagnation or, more probably, decline

in

population. Trends for 1700 to 1840 are also not entirely clear. They may have varied from

region to

region; a modest upward trend is our best guess at the moment.

30

In his study of long-term trends

in

English wages, Lindert ("English Population") similarly

found

that short-termprice movements overwhelmed the population variable in the real-wage equation.



310 Ozmucurand Pamuk

trendof 0.3

percentper annum,suggesting

a

modest but

steady

rise in the

demand or labor.We tried o separate he time trend nto two

subperiods

at

1770,hypothesizing hatgrowth nlabordemandmayhave accelerated fter

the Industrial

Revolution. However,

t

in

two

subperiods

did not

perform

differently han a single t for the entireperiod.It is not

easy to interpret

he

performanceof t, because even thoughthere is

considerable

evidence for

increases n per capita income after 1880, the

existing literaturedoes not

suggest

a

long-termgrowth rendfortheOttoman

economy for the period

before1850. Nonetheless,one nowhas to consider he

possibility

thatsome

modest trendfor productivity ncreasesdid

exist in the

easternMediterra-

nean before the IndustrialRevolution.Learningby doing, or the diffusion

of new technologyfromWesternEurope,may

help explain

this

trend.3

COMPARISONSACROSS EUROPE

In

a recentstudyof prices andwages

in

European ities fromthe Middle

Ages

to

WorldWarI,

RobertAllen

has

utilizeda

largebody

of datamost of

which was

compiled

under

he

aegis

of the International

cientificCommit-

tee on Price History.32n order o facilitatecomparisons,he convertedall

price and wage series into gramsof silver, andchose

as

a

base

the index of

average

consumer

prices prevailing

in

Strasbourgduring

the

period

1700-1749.33

Allen has

argued

hateven

thoughwages

in a

single city may

be

accepted

as

a

barometer f

wages

in

the whole economy, nternational

omparisons

must be made between

cities

at similar

evels

in

the urban

hierarchy.Since

his

study

uses data from cities at the

top

of their

respective

urban

hierar-

chies-such asLondon,Antwerp,Amsterdam,Milan,Vienna,Leipzig,and

Warsaw-it

would make sense

to insert

Istanbul,

another

city

at the

top

of

the urban

hierarchy

f its

region,

nto this framework.

t

is

not

very

difficult

to do

so,

since we have

alreadyexpressedprices

and

wages

in

grams

of

silver.

It remains

now to

express

Istanbul

prices

in

terms of the Allen base

(i.e., Strasbourg, 700-1749). Forthispurpose,

Ottoman ommodityprices

for

the interval

1700-1749

were

applied

o Allen's

consumerbasket

with

fixed

weights.

A

second and

equally

useful

method

of

linking

Istanbul's

pricelevel to those of otherEuropean ities in the Allen set was to employ

the detailedannual

commodity-price

eries

gatheredby

Earl Hamiltonfor

Valencia

and

Madridover the

period

1500-1800 and

compare

hemwith the

Istanbul

prices for the same commodities.34 ince Valenciaand

Madrid

prices

were

already

calibrated nto the Allen

set,

it was then

possible

to

31

Persson,

Pre-Industrial Economic Growth.

32

Cole

and

Crandall,

"International

Scientific Committee."

3 Allen, "Great

Divergence."

34

Hamilton, American Treasure and Warand Prices.



Ottoman

Living Standards

311

determine

he Istanbul

rice

evel vis-a-vis European

ities for each

nterval.

The price

series

for

flour,

mutton,

olive oil,

cooking oil, onions,

chickpeas,

pepper,sugar,and wood were used in these calculations.The two proce-

dures

produced

very

similarresults.

One

revision

n theAllen seriesconcerns rice

evels during

he 1850-

1899

and

1900-1913 intervals.

n

order o

remain onsistent

hroughout,

llen con-

tinued

o

express

all

prices

and

wages

n

grams

of

silvereven after

1870,

when

silver

prices

declined harply

ndmostEuropean

ountries

bandoned imetal-

licstandards

n

favor

of

gold.

While

echnicallyorrect,

hisprocedure

ives

the

impression

hatmostEuropean

itiesexperiencedigh

rates

of inflationduring

thisperiod,whenin fact nominalpricesandwagesremained uitestable.We

chose

to

express

all

price

andwage

levels

in

gold

after1870

by

deflating

he

Allen series

by

1.3 and

2.1 for 1850-1899

and

1900-1913,respectively.

One

of

Allen's

major

findings

s thatreal

(i.e.,

purchasing-power-parity

[PPP]adjusted)

wages

in

these European

ities divergedstrongly

between

1500 and 1914.

He shows that hedispersion

f

real

wages

was lowest

in

the

earlypart

of

the sixteenthcentury.

This

picture

changed

after 1600

as real

wages

in

northwesternEurope (London,

Antwerp,

and

Amsterdam)

re-

mained teady,whileItalianandSpanishas well as centralandeasternEuro-

pean

real

wages

declined until 1850.

Allen's study

thus suggests

that the

emergence

of a North-Southgap

within

Europe

was not the product

of

developments

afterthe Industrial

Revolution,

but resulted

from

long-term

trends

during

he seventeenth

and

eighteenth

enturies.

Our

ndices show

that

daily

wages

in

Istanbul

andothereastern

Mediter-

ranean ities expressed

n

grams

of silverwere

comparable

o those

in

many

other locations

in northernand southern

Europe

in the earlypart

of the

sixteenthcentury.However,becauseIstanbul riceswerehigherthan hose

of all other

cities

in

Allen's sample,

realwages

in Istanbul

variedbetween

60 and 90

percent

of real

wages

in othercities

during

hat

period

(Figures

2

and

3).

It

is

interesting

hat while

real

wages

continued

o decline

after

1600

in

manyparts

of

Europe, hey

remainedittle

changed

n

Istanbul

until

late

in

the eighteenth

entury.

While

Istanbulwages

approached

hose

else-

where

n

Europe,

a

wage gap

of one-third o

one-half

between

Istanbul

and

the

leading

cities

in

northwesternEurope

continued until

the Industrial

Revolution.

Wage

and

price

indices

for the

western

Netherlands

ecently

constructed

by

Jan

Luitenvan

Zanden

present

another

pportunity

o

investigate

he

real

wage gap

between the eastern

Mediterranean

nd

northwesternEurope

before

he Industrial

Revolution.3s

Measured

n

grams

of

silver,

the nominal

"

The van Zanden indices are available fromwww.iisg.nllhwp/;

for

prices

and

real

wages

in Nether-

lands during the early

modem era, see also de Vries

and van der

Woude, First Modern Economy,

pp. 607-54.



312

Ozmucurand Pamuk

-

Istanbul

14

*

Antwerp+Amsterdam

-

*-London

12

M*---Paris

--i-

-Valencia

-Leipzig

10 -- -

-Vienna

-

--Warsaw/

/

8-

4~~~~~~~~~~~~~~~4

2

0

I

I .

I

.

II

.

I .

I

1450- 1500-

1550- 1600- 1650- 1700- 1750- 1800- 1850- 1900-

1499 1549 1599 1649 1699 1749 1799

1849 1899

1913

FIGURE

REAL WAGE OF UNSKILLED

CONSTRUCTION WORKERS

IN

EUROPEAN

CITIES,

1450-1913

(wages [in grams

silver]

divided

by

CPI

[in

grams

silver])

Sources:

Istanbul:

see the text. Other

cities:

Allen,

"Great

Divergence."

wages

of skilled and

unskilledconstruction

workers

were

quite

comparable

in

the two

regions

during

the first half of the sixteenth

century.

However,

ourdirectcomparison f consumerprice evels (basedon thepricesof more

thanhalfa dozen commoditieswhich areavailable orboth

regions)

ndicate

that

n

silvertermsIstanbul

rices

were about60 to

80

percent

higher

during

the same

period.

During

the next two

centuries,

or until

about

1750,prices

andnominal

wages

in

thewestern

Netherlands

measured

n

grams

of

silver

rose

by

about 250

percent,

with the latter

lagging

somewhat behind the

former.

In

Istanbul,

on the other

hand,prices

in

grams

of silver

remained

roughly

unchanged

while

real

wages

declined

slightly.

Our

preliminary

comparisonof the two seriesthussuggeststhat realwages in Istanbulre-

mained

one-third o one-half

below real

wages

in

the

westernNetherlands

until the era

of the Industrial

Revolution.

Finally,

comparing

our Istanbul

data o Hamilton's

wage

and

price

seriesfor Madridand

Seville revealsreal

wage

trends

over the

periods

1500-1550 and

1700-1750

that

are

also simi-

lar

to those outlined

n

Figures

2 and

3.36

36

Commodity-price

and

nominal wage series for

Spain

are

available from Hamilton, American

Treasure and Warand Prices, appendices.



OttomanLiving

Standards

313

25

Istanbul

Antwerp+Amsterdam

A-

London

20

-

Paris

- -a-

Valencia

-

--Leipzig

-

--Vienna/

15-

15 - 4-

-Warsaw/

10

5-

0

I

I

.

I

,

I

.

I

. -

.

I

. I

1450-

1500- 1550- 1600-

1650- 1700- 1750-

1800- 1850-

1900-

1499 1549

1599

1649 1699

1749

1799 1849 1899

1913

FIGURE

REAL WAGE OF

SKILLED

CONSTRUCTION

WORKERS

IN

EUROPEAN

CITIES,

1450-1913

(wages [in grams

silver]

divided

by CPI)

Sources:

Istanbul: see

the text. Other cities:

Allen,

"Great

Divergence."

WAGES

AS AN

INDICATOR

OF THE

STANDARD OF LIVING

Istanbul ealwages increasedby about wo-thirds romthe last quarter f

the

eighteenth

centuryuntil World

War

I

(Figure1).

As

a

result,

while

the

gap

in

real

wages

between

Istanbul

ndcities in northwesternEurope Lon-

don,Antwerp,

Amsterdam,

and

Paris)

widened

after he

IndustrialRevolu-

tion,

that

gap

was lesser

than

one

might

haveexpected.On

the eve

of

World

War

,

real

wages

of

unskilled

workers

n Londonwere 2.7

times

as

high

as

in

Istanbul;

he

corresponding

atio for Amsterdam

and

Antwerp

was 1.9,

and

for Paris 1.6

(Figure

2).

While theseresultsarebroadly n linewithourexpectations,a compari-

son with the

PPP-adjusted er

capita

GDP

series

recently

constructed

by

Maddison

evealsdifferences hat

arenot

insignificant.

The Maddison eries

show

that

per

capita

GDP

differencesbetween Turkey

and each

of four

westernEuropean

ountries

the

United

Kingdom,

France,

he

Netherlands,

and

Italy)

were wider

than

the

differentials

n the real

wages

of

unskilled

construction

workers

in the

leading

cities

of

each

pair

of

countries.37

37

Maddison, WorldEconomy.



314 Ozmucurand Pamuk

Maddison's PPP-adjusted per capita GDP estimates for 1913 point to a 1:5

gap between Turkey and the United Kingdom, a 1:3.8 gap between Turkey

and the Netherlands, a 1:3 gap between Turkeyand France, and a 1:2.3 gap

between

Turkey

and

Italy.

In

short,

the

gap

in

PPP-adjusted per capita GDP

between Turkey and these European countries

on the eve of World

War

I

appears, on the average, to be twice the real wage gap between Istanbul and

the leading cities in these countries. (Indeed, Istanbul real wages were

slightly higher than those of Florence and Milan.) This is an interesting and

potentially important divergence

that needs

to

be examined further.

Part of this

divergence may

be due to errors of measurement

in

the

avail-

able series. For example, there may be errors in our real wage series for

Istanbul.

We are aware that most

of

our

knowledge

about the

wages

of

construction workers has been based upon state records and records of the

middling

and

larger pious

foundations. These

larger

institutions

could

seek

out the best craftsmen

and pay higher wages

than smaller

employers.

Clearly,

this

bias exists

in

most

wage

series

but

it

might

be

greater

the

in the

case

of

Istanbul

than for

other European cities. Otherwise, we

believe

that

our

wage series are quite reliable, especially since they are based on large

numbers of observations. Infact, the London-Istanbul real wage gap implied

by

our

series

is

actually larger than the wage gap estimated by earlier studies

by Korkut Boratav, GtunduizOk9iin, and Pamuk

on

Turkish urban wages,

and

by

Berov on

Balkan wages. These studies pointed to a gap in nominal

wages

converted

at the prevailing rate of exchange of about 1:2.5.38

Secondly,

there

may

be

errors

in

the

way

our Istanbul

prices

have

been

inserted into the

Allen

framework. We doubt, however, that these can be

significant,

since our

price

series was linked to the Allen

base by comparing

a numberof independent price series. In addition, since our real wage series

for Istanbul

show

a 20

to 30 percent overall increase over the

four centuries

to

1914, raising

the nominal

price

level

and

lowering

real

wages

for

1900-1913 would not only bring Istanbul prices uncomfortably close to

those of London at the

endpoint,

but it would also

raise

Istanbul

prices

across time

and

thus widen the

Istanbul-London

real

wage gap

to

more than

1:2 for

the

early part

of the sixteenth

century.

Thirdly,

there

may

be room for

improvement

in the

way

the

Maddison

series measure the differences in per capita GDP between high- and low-

income

countries.

In a

recent

study,

Leandro Prados de

la

Escosura has

pro-

vided an

alternative set of

GDP series for

the

United States

and

Europe since

1820. While

the

Maddison series were derived

by working

backwards

from

a recent benchmark

year

on

the

basis of

growth rates,

Prados de

la

Escosura

used

a short-cut method to

obtain

current

price estimates,

also

adjusted

for

PPP. His

estimates indicate

that

the use of current

prices

reduces

considerably

38

Boratav, Ok9iun, and Pamuk, "Ottoman Wages"; and Berov, "Wages in the Balkans."



Ottoman

Living

Standards

315

the gap

in

per

capita

ncome

between the

high-

and low-income

countries:

specifically,

he gap

betweenTurkey

nd heUnited

Kingdom

n 1913would

be reduced rom1:5 (as estimated y Maddison)o approximately:3.

Despite

these

potential

ourcesof error,we

still

doubt hat

mprovements

in the available

seriescan

eliminate

altogether

he

divergence

between

the

urban

eal

wage

and

percapita

GDP

series. We

think

thereare

a

number

of

other

actors

which

may

have also contributed

o this

divergence.

First,

here

had emerged

by

the nineteenth

century mportant

differences

between

the

nominal

wagesof

construction

workers

n Istanbul

ndthose

of other

Otto-

man cities.

Between 1850

and 1914

nominal

wages

were,on

average,

40 to

50percenthigher n Istanbul han n othercities withinthe bordersof mod-

em Turkey.

n contrast,

officialdata

ndicate

hat in 1913/14

the

pricesof

essential

commodities

purchased

by

consumers

appeared

o be

lower in

Istanbul

han

the average

of the 20

leading

cities

within

Turkey.40

Secondly,

here s evidence

fora

growing

scarcity

of labor n urban

areas

from the mid-nineteenth

entury

untilWorld

War

I.

Anatolia

was

a

labor-

and capital-scarce,

and-abundant

egion

until

the

middle of

the twentieth

century;

hese factorproportions

upported

easant

ownership

andproduc-

tion.The availabilityof landand heprevalenceof smallpeasantproduction

may

have slowed

rural-urbanmigration

and

contributed o

laborshortages

in the

urban

areas.

In

a recent

study

of

nineteenth-century

natolia,

Bogag

Ergene

has

providedevidence

for

the growing

scarcity

of labor

n the urban

areasand

the

increasing

gap

between

urban

andruralwages.

He alsoargues

that ncreases

n urban

real

wages

must

have exceeded

increases

n

per

ca-

pita

GDP

during

he nineteenth entury.41

These urban-rural

differences

combined

with the

regional

differences

mentionedabove to createlargedifferencesbetween per capitanominal

income

levels

in the Istanbul

region

and the rest of

the

country.

Vedat

Eldem's estimates

ndicatethat on

the

eve of

World

War

I, per

capita

in-

come levels

in the Istanbul egion,

which

was mostly

urban,

were

twice

as

high

as the

average

or the

Ottoman

Empire

as a whole.

All

this

suggests

hat he

daily

wages

of urban

onstruction

workers

n the

Ottoman

Empire

may

have

been

high

in

relation

o the

underlyingper

capita

income.

In

a recent

study,Jaime

Reis encountered

imilar

difficulties

n

his

attempt o useurbanwagesasaproxyfor percapitaGDP.Whilecomparing

two

groups

of countries

n the

European

eriphery

during

he firsthalf of

the

nineteenth

entury,

he

observed

hat

daily

wages

of construction

workers

n

the

capital

cities of

Spain

and

Italy

were

at

the

same

level as

comparable

wages

in

Scandinavia;

but all other

indicatorssuggested

that

per

capita

39

Prados de la Escosura,

"InternationalComparisons."

40

Turkey, State

Institute of Statistics,

Ihsai

Yilblk.

41

Ergene, "Wages."



316

Ozmucur

and

Pamuk

income

levels

were

considerablyhigher

n

the northern ountries.42

t

the

otherend

of thespectrum,he real wages

of construction

workers n Milan

andFlorenceduring henineteenth enturyappearunusuallyow in relation

to

the availableseries

for

per capitaGDP

in

Italy

during

he same

period.43

CONCLUSIONS

One

of the more

important

uestionsregarding

he world

economy

in

the

earlymodemera concerns

he emergence

and evolutionof

the

gap

in levels

of real ncome

between

today's

developed

and

developing

countries.Utiliz-

ingalargevolumeof archivaldocuments, hisstudyhas established or the

first

ime

the

long-term

rends

n

wagesof

skilled

and

unskilled

construction

workers n IstanbulandotherOttoman

ities

in

southeastern

Europeand

the

Near

East from the second

half

of

the fifteenth

century

until

WorldWarI.

These

price

and

wage

series were then

inserted nto

a

larger

ramework

of

price

andwage

trends n

European

ities

during

he same

period.One

needs

to be

cautiousabout

using

the

daily

wagesof urban

workersas indicators

of

the

standards f

living

for an

entirecountry.

Nonetheless,

n the absence

of

reliableinformationaboutproductionand income, real wage series still

serve as

the best indicator

available

for long-termtrends

in standardsof

living.

The

Ottoman

ndices indicate hat

he

realwages

of unskilled

urbancon-

structionworkersdeclinedby 30 to

40 percent

during he sixteenthcentury.

After

remaining oughlyunchanged

until

the

middle of

the

eighteenth

cen-

tury, hey

increased

by

about20 to

30 percent

rom

the

late

eighteenth

until

mid-nineteenth

enturies,

and

then

by

another40

percent

during

the late

nineteenth ndearly wentieth enturies.On the eve of WorldWar , the real

wages

of unskilledconstruction

workerswere about

10 to 20 percentabove

their evels

in

1500.

Because

the

skill

premium

rose

during

he

nineteenth

century,

real

wages

of skilled workers

n

1914

were 50

percent

or

more

above their

evels

in

1500.

Comparing

hese resultswith

Allen's

findings

for other

European

ities

reveals three

basic results.First,real

wages in Istanbul

and otherOttoman

cities remained lose to

urban

wages

in

many

other

parts

of

Europe

untilthe

mid-eighteenth entury.Real wages in Ottomancities were lower in 1750

than

n

1500,

but the decreasewas

probably

not as

large

as

in

many

other

parts

of

Europe.

Secondly,

our

comparisonsuggest

hat

real

wages

in

north-

western

Europe(Amsterdam,

Antwerp,

andLondon)were

alreadyhigher

than n

Istanbulat the beginningof the

sixteenthcentury,and

that this gap

remained

oughly

unchangedup to the Industrial

Revolution.

It would be

42

Reis, "How Poor?"

4

Allen, "Great Divergence."




317

useful to

check this result

with additional

esearch.

Thirdly,

he trendwas

upwards

or realurban

wages

in most

regions

of Europe n the

wake of

the

IndustrialRevolution,especiallyafter1850;real wages in western Europe

increased

more than

in the

eastern

Mediterranean

uring

his

period.

Our

real

wage

series also

point

to the existence of a modestbut

statisti-

cally

significantupward

rend n

Ottoman

urbanwages dating

back to the

sixteenthcentury,

uggesting

a

modest

but

steady

rise in demand or

labor.

It is not

easy to interpret

his result,because

theexisting literature

doesnot

point

to

the

existence

of

long-term

growthtrend,

especially

for theperiod

before 1850.

In

light

of the

new

evidence,

we

now need

to

consider

the

possibility of a slow and modest rise in productivityaroundthe eastern

Mediterraneann

the erabefore he

IndustrialRevolution.

Learning ydoing

or the diffusion

of

new technology

fromWesternEurope

may help explain

this

trend.

Our

overall results thus amountto a

guardedlyoptimistic

revisionism

regarding

Ottoman

tandards f living,

both

in

theearly

modem era

and

in

the wake

of the Industrial

Revolution.This

picture

s

consistent

with

the

recentarguments

n Ottoman

historiographyo the

effectthat the Ottoman

empiredidnot simplyandirreversibly eclineafter 1600. Recentliterature

has

emphasized

hat

Ottoman

tateand

society

showed

considerable

ability

to

reorganize

as

a

way

of

adapting

o changingcircumstances

rom

the

sev-

enteenthhrough

he nineteenth enturies.With

pragmatism

nd

flexibility,

the

Ottoman

tate

adapted

not

only

the

military echnology

but

also its fiscal,

financial,

andmonetary nstitutions

uring hisperiod.

Thispragmatism

nd

flexibilitymay

help explain

the surprisingongevity

of the

so-called "sick

man of

Europe."

Appendix

1: Long-Term

Trends n Indices

Based on trends

n

money,prices,population,

andrealwages,

it is

best

to examinethese

four-and-a-half

enturies

nfive

distinct

subperiods.Separate

egressions

are used to

esti-

mate trend

ines

for

each one."

The first

period,

1469-1585,

is characterized y stable

money, rising population,

and

rising prices

expressed

n

grams

of

silver.

Thetrend ines indicate

that the silver content

of theakVedeclinedatanannualrate of 0.52 percent,pricesrose atan annualrate of 1.13

percent,

and real

wages

declined

at

an

annualrate of 0.64

percentduring

his

period.

During

the second

period,

1585-1690,

there

was a

high

degree

of

monetary

and

price

instability ogether

with

decliningpopulation.

The silver content

of

the currency

luctuated

wildly

around

a

trend

of

1.05 percent

per annum,prices

rose

at an annual rate of 0.67

percent,

and real

wages

rose at annualrate of 0.29 percent.

The third

period,

1690-1768,

was once

again

a

period

of

monetary

and

price

stability.

The silver contentof the

currency

declinedat

an

annual

ateof

0.30 percent,prices

rose at

an annual

rate

of 0.44

percent,

and real

wages

declined

at

an

annual

rate of

0.15

percent.

4 Poirier, Econometrics of Structural Change; and

Greene, Econometric

Analysis.



318

Ozmucurand Pamuk

The fourthperiod, 1769-1843,

is characterized y

the most rapidrates of debasement

and inflation n Ottomanhistory,and

by rising real wages. The silver content

of the

cur-

rency declined

at an annualrate of

3.49 percent,pricesrose at an annual

rate of 3.81 per-

cent, and real wages rose at an annualrate of 0.49 percent.Frequentwarsmay have con-

tributed o the rising trend

n

real

wages.

The fifthperiod,1844-1914, witnessed

stablemoneyunderbimetallism,

apidly xpand-

ing international

rade,stable prices,

and rising real wages. The silver content

of the cur-

rency remained

unchanged,pricesincreasedat an annual

rate of 0.67 percent, and real

wages

rose at 0.21 percentper

annum.Most of the

price

increases

occurredearly

in

the

period and

were the lagged result

of debasements n the previousperiod.

Appendix2: Determinantsof Real Wages

This

appendix

presents

he detailsof our ime-seriesanalysisregarding

he determinants

of

realwages.

In the shortandmedium erms,

he most important eterminants

f Ottoman

real wages were changes in prices

and the manner n

which nominal wages adjusted o

them.

Because nominalwages were slow to adjust,price

shocks led to fluctuations

n

real

wages. The

most importantdeterminant f the price evel,

in turn,was debasements.

Otto-

man

prices

almost always rose

in the aftermath f debasementsbecause

a debasement

typically increased

he nominal value of coinage in circulation. n order

to study the lag

structure

with which

prices

and

wages adjusted

o debasements,

we have

developed

a

distributedag

model

that

relates

nominalwages (W)andthe consumerprice

index (P) to

present and laggedvalues

of

silver

contentof coinage (S). All variables

ncluded in the

equation

are

expressed

n

logarithms.

Using the general-to-specific

methodology,45qua-

tions

are

estimatedwith lags up to 10 years; only lags

with significant coefficients are

included

n the final

equation.

This approach as the advantage f not placing

any restric-

tions

on

the

lag structure,

ut

it

has

the disadvantage

f

possible multicollinearity

mong

explanatory

ariables.The

model

is of

the following

form46

ty

=

1AS,_

+

ut,

i

=

1,2,...k

(Al)

where

k

is the

number

of

lags.

The mean lag indicates the average

numberof years

needed to see the effect of

the

independent

ariableon the dependent ariable,

while

the

median ag gives

the numberof

years during

which half of

the effect has occurred.

The mean

lag

can be calculatedas

k

ifi

i=O

Ai

and

the

median

ag

can

be calculatedwith

the

formula

i

i=O

Ai

The median

lag

is

the first k* value

that

gives

the sum

0.5.

45

Hendry, Dynamic

Econometrics.

46

Greene, Econometric Analysis.



OttomanLiving

Standards

319

Regressionresults ndicatethat the

impactof a change n

the silver contentof the cur-

rency was quicker

on prices than on wages. When prices are

used as the dependentvari-

able, the lags

that are significantlydifferent rom zero are:

zero, one, four, six,

and eight.

The total effect is -1.088 (sum of coefficients).At equilibrium, 1-percentdecrease n the

silver

content of coinage causes

a

1.088-percentncrease

in

the consumerprice index.

Furthermore,

lmost half of the total

effect is felt in that year and the year

following.

Ceterisparibus,

a

1-percentdecrease

n the silver contentof

coinage

thus causes a

0.236-

percent

ncrease n the price level

in

that

year,and a 0.261-percent ncrease

the following

year.

The mean lag is 3.59 years, and the median ag

is

4

years.

P,= 0.113

-

0.236 S,- 0.261

St,

-

0.207

St-4-

0.129

St6-

0.255

St8

(0.86)

(-3.60) (-4.03) (-3.33)

(-1.87) (-3.92)

R2=

0.993, SEE

=

0.1327, F= 6814.8, Durbin-Watson 2.30, AR(1)

=

0.874

The impact on wages

of a

change

in the silver content

of the currencyoccurredmore

slowly.

When

nominal

wages

are used

as

the

dependentvariable, zero-, one-,

two-,

and

three-

period ags

arenot significantly

different romzero.However,coefficients

associated

withfour-,six-,

seven-,

and

eight-periodags

are

significantly

different rom

zero. The total

effect

is

-1.323 (sum

of

coefficients).

At

equilibrium,

a

1-percentdecrease

n

the silver

content

of

coinage

causes

a

1.323-percent

ncrease

n

wages.

A

1

percentdecrease

n

silver

content

of coinage causes a 0.232 percent ncrease n wages

after four years,

and 0.402

percent

aftersix

years.

The mean

lag

is

6.43,

and

median ag

is

seven

years.

Wt

=

0.973

-

0.232

St4

-

0.402

St6

-

0.339

St7

-

0.350

St8

(4.19) (-2.43) (-2.99) (-2.57)

(-2.47)

R2=

0.995, SEE

=

0.1378, F=

3630.3, Durbin-Watson 2.73, AR(1)

=

0.871

Our

distributed-lag

model thus

indicates

hat n

response

o

debasements,

both

prices

and

nominal

wages adjusted.However,because

he

adjustment

fnominalwages

was slower han

thatof

prices,

debasementsed to

declines

n

real

wages

in the shortand

even

medium erm.

This nteraction etweenprices

andrealwagescanbe examined urtherwithin

hebroader

framework f a real-wageequation.We have employedtwo models, one with adaptive

expectations

n

prices,

andanother

ne withpartial djustment

n real

wages.47

n

bothmodels

real

wages

are

expressed

as a

functionof inflation

and

real wages

in

the

previous

year.By

appropriateubstitution,

t is not difficult

o

see

that

realwages

aredetermined

y

the

present

and

past

nflationrates.

In

this

respect

ourmodel

is similar o thatused

by

PeterLindert.48

In our

regressions,

owever, nly

the nflation

f

thepresent

nd

past

four

years

appear

o

be

statistically ignificant.

The estimated

quation's egression

oefficientsand determination

coefficient

are

statistically ignificant;

he Durbin-Watsontatistic

ndicates

hat

there

s no

serialcorrelation. his

was achieved

by usinggeneralized

east

squares,

which

s

indicated

y

theAR(1)coefficient. t is noteworthyhat he time-trend ariable,usedto capturehe effect

of other ariables uchas

population

nd

echnologicalhange,

s

statisticallyignificant.

Other

thingsbeing

constant,

eal

wages

ncreased

t 0.34

percent

eryear

n this

equation:

RW,

=

-4.496

-

0.900

P,

-

0.773

Pt-,

-

0.649 P-2

-

0.513

Pt3

-

0.451

Pt-4

+

0.0034 t

(-2.51) (-6.45) (-4.42)

(-3.20)

(-2.41) (-2.65) (8.23)

R2=

0.808,

SEE

=

0.140, F=

40.95, Durbin-Watson

2.31, AR(1)

=

0.777

4 Greene, Econometric Analysis.

48Lindert,

"English Population."



Ottoman

Living Standards

321

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