Local convergence: Baden 1829–1847

Abstract

This paper investigates whether internal institutional homogenisation during nation-state formation led to internal local convergence. We use the case of Baden with a new economic measure based on tax revenues derived from archival records. Our measure of local economic activity shows no evidence for convergence, unconditional or conditional, for the period 1829–1847. However, looking at sub-periods the six year interval after Baden's 1836 entry into the Zollverein customs union exhibits an adjustment effect resembling absolute convergence. Rejecting urbanisation as the reason behind this pattern we discuss alternative mechanisms in particular the reallocation of labour.

Keywords:

• Baden
• local growth
• convergence
• urbanisation

Subject classification codes:

• N13
• N93
• O47

Notes

¹Solow, ‘A Contribution’ (1956).

²See Barro/Sala-i-Martin, Economic Growth (1995) for a discussion of this literature.

³Barro/Sala-i-Martin, Economic Growth (1995) and Mitchener/McLean, ‘U.S. regional Growth’ (1999).

⁴For example, see Persson, ‘Convergence’ (1997) and DeJuan/Tomljanovich, ‘Income’ (2005).

⁵See Higgins et al., ‘Growth’ (2006).

⁶Wuerttemberg had about 1.6 Million inhabitants and a size of 19,508 sqkm; Henderson, Zollverein (1984) also provides information about other German states.

⁷See Müller, Zolleinigung (1984), Fischer, Staat und Anfaenge (1962), and Regenauer, Staatshaushalt (1863).

⁸Records are taken from Generallandesarchiv Karlsruhe, Nr 237/13929.

⁹Müller, Deutsche Bund (2006).

¹⁰Fischer, Staat und Anfaenge (1962).

¹¹See Müller, Zolleinigung (1984) and Fischer, Staat und Anfaenge (1962).

¹²For a discussion see Eusterbrock, ‘Industrielle Entwicklung’ (1968).

¹³For an extended discussion of these negotiations see Hahn, Geschichte (1984), Henderson, Zollverein (1984), Ploeckl, ‘Formation’ (2010).

¹⁴For economic impact see Shiue, ‘Political Fragmentation’ (2005) and Ploeckl, ‘Borders’ (2010).

¹⁵For an extended discussion about Baden's economic policies see Fischer, Staat und Anfaenge (1962) and Müller, Zolleinigung (1984).

¹⁶Utilized local tax data is taken from Generallandesarchiv Karlsruhe, Nr 237/13929.

¹⁷See the discussions in Regenauer, Staatshaushalt (1863) and Fischer, Staat und Anfaenge (1962).

¹⁸Regenauer, Staatshaushalt (1863).

¹⁹Aggregate tax revenue numbers are taken from Finanzministerium Baden, Amtliche Beitraege (1851).

²⁰See Schremmer, ‘Gewerbesteuer’ (1987).

²¹The quality of the self-reporting was also enhanced through the local knowledge of the village or town administrators that served as a reporting conduit to the tax officials.

²²Ploeckl ‘Internal Impact’ (2012) uses the data to derive a number of employment series that demonstrate the annual nature of the updating process.

²³For details, including the pro-rata mechanisms for death or substantial fluctuations of employees, see Staatsregierung Baden, ‘Gewerb-Steuer-Ordnung’ (1815). Schremmer, ‘Gewerbesteuer’ (1987) gives a more detailed discussion about the whole process.

²⁴Tax district boundaries are determined based on Steuerdirektion, ‘Einteilung’ (1837) and Kommission, Historischer Atlas (1979).

²⁵For the legal text see Staatsregierung Baden, ‘Gewerb-Steuer-Ordnung’ (1815) and ‘Aenderungen’ (1816).

²⁶For a discussion see Schremmer, ‘Gewerbesteuer’ (1987).

²⁷23,801 widows are separately listed without reference to income or occupation.

²⁸Statistics and examples are taken from Volz, Gewerbstaschenbuch (1835), and Dietz, Bericht (1847).

²⁹Agricultural capital was specifically taxed through the land and building taxes.

³⁰There is an intermediate categories, Flecken, which are treated by the tax code like towns.

³¹Data for urbanization rates are taken from Heunisch, Beschreibung (1833), Staatsregierung Baden, Hof- und Staatshandbuch (1836) and Ministerium des Inneren, Gemeinden (1855).

³²See Barro/Sala-i-Martin, Economic Growth (1995) for an extended discussion.

³³See Barro/Sala-i-Martin, Economic Growth (1995) for an extended discussion.

³⁴The regional dummies follow the administrative structure of Baden, the Seekreis district is labelled South, the Oberrheinkreis West, the Mittelrheinkreis Central and the Unterrheinkreis North, following their relative geographic position.

³⁵Variations of this specification, especially also with Panel estimation approaches, essentially show no differential results and demonstrate the robustness of these numbers.

³⁶See Regenauer, Staatshaushalt (1863).

³⁷The shares are within 2% for agriculture and within 4% for other occupations.

³⁸Formal regression results available from the author by request.

³⁹Formally the numbers are around 0.14.

⁴⁰Ploeckl, ‘Internal Impact’ (2012) documents investment by foreign entrepreneurs, which points towards substantial internal mobility.

⁴¹See Ploeckl, ‘Internal Impact’ (2012).

⁴²See Ploeckl, ‘Internal Impact’ (2012) for a discussion of the impact of FDI and trade patterns on occupational structures in the wake of the Zollverein.