Labour and the ‘law of one price’: regional wage convergence of farm workers in Sweden, 1757–1980

Figures & data

Figure 1. The coefficient of variation for nominal and real county wages of male farm workers 1757–1980.

Sources: Nominal wages: 1757–1865: Jörberg (1972b, pp. 588–600); 1865–1910: Hushållningssällskapens berättelser; 1911–1928: Arbetaretillgång, arbetstid och arbetslön inom Sveriges jordbruk; 1929–1945: Lönestatistisk årsbok. Benchmarks of 1950, 1955 and 1960: Riksarkivet, Socialstyrelsens 5:e byrån. H3AA Lantarbetarnas löneförhållanden 1919–1961; Benchmarks of 1970 and 1980: Riksarkivet, avdelningen för företagsstatistik, enheten för arbetsmarknadsstatistik, sekt för årlig lönestat inom jordbruk mm 037. Cost-of-living: 1757–1860: Eight price series from Jörberg (1972b, pp. 119–338) and budget weights from Myrdal and Bouvin (1933, p. 119, Table 16, Budget a); 1860–1913: 11 price series from Myrdal and Bouvin (1933, pp. 206–238) and budget weights from Myrdal and Bouvin (1933, p. 119, Table 16, Budget b); 1913–1930: 31 price series and budget weights from Detaljpriser och indexberäkningar åren 1913–1930 (1933); 1930–1946: 45 price series from Sociala meddelanden (1931–1947) and budget weights from Konsumentpriser och indexberäkningar 1931–1959 (1961); 1946–1959: 42 price series and budget weights from Konsumentpriser och indexberäkningar 1931–1959 (1961) for eight broad regions; 1960–1980: Hushållsbudgetundersökningen 1969. Statistiska meddelanden P1971:9, Table 29; Hushållsbudgetundersökningen 1978, Table 20a; Hushållens livsmedelsutgifter 1989, Table 7.

Table 1. Sigma-convergence.

Period	Nominal wages		Real wages
	Time coeff.	R^2	Time coeff.	R^2
	SE	P > |t|	SE	P > |t|
The long run
1757–1980 (a)	−0.0027	0.19	−0.0028	0.25
	0.0004	0.000	0.000	0.000
1813–1980 (c)	−0.0065	0.55	−0.0057	0.53
	0.0005	0.000	0.000	0.000
1865–1980 (c)	−0.0116	0.64	−0.0101	0.64
	0.0009	0.000	0.001	0.000
Sub-periods
1757–1776 (d)	−0.0250	0.36	−0.0235	0.37
	0.0079	0.005	0.007	0.004
1776–1813 (b)	0.0043	0.23	0.0095	0.25
	0.0035	0.232	0.003	0.001
1813–1864 (c)	0.0040	0.27	0.0013	0.02
	0.0009	0.000	0.001	0.354
1865–1913 (c)	−0.0105	0.41	−0.0108	0.39
	0.0018	0.000	0.002	0.000
1913–1932 (c)	−0.0041	0.02	−0.0077	0.05
	0.0072	0.578	0.008	0.344
1932–1955 (c)	−0.0385	0.73	−0.0226	0.64
	0.0063	0.000	0.005	0.000
1955–1980 (c)	−0.0214	0.31	−0.0112	0.14
	0.0227	0.444	0.020	0.625

Note: Following formula 1.

(a) 17–24 counties; (b) 20–24 counties; (c) 24 counties; (d) 17–20 counties.

Table 2. Beta-convergence: nominal wages.

Period	Model	Conv. rate	S.E.	P > |t|	R^2	Prob > F
The long run
1757–1980 (a)	UC	0.019	0.00014	0.000	0.99	0.000
	C1	0.019	0.00012	0.000	0.99	0.000
	C2	0.020	0.00014	0.000	0.99	0.000
	C4	0.019	0.00012	0.000	0.99	0.000
1813–1980 (c)	UC	0.032	0.00026	0.000	0.96	0.000
	C1	0.019	0.00027	0.000	0.97	0.000
	C2	0.034	0.00027	0.000	0.96	0.000
	C4	0.019	0.00028	0.000	0.97	0.000
1865–1980 (c)	UC	0.026	0.00035	0.000	0.96	0.000
	C1	0.032	0.00056	0.000	0.97	0.000
	C3	0.027	0.00036	0.000	0.97	0.000
	C5	0.030	0.00075	0.000	0.97	0.000
Moran’s I (1865–1980)	UC	Chi 2=	0.32	Prob. HO	0.5729
	C1	Chi 2=	0.28	Prob. HO	0.5988
	C3	Chi 2=	0.42	Prob. HO	0.5193
	C5	Chi 2=	0.28	Prob. HO	0.5988
Sub-period
1757–1776 (a)	UC	0.088	0.00475	0.000	0.84	0.000
	C1	0.105	0.00611	0.000	0.82	0.000
	C2	0.107	0.00656	0.000	0.78	0.000
	C4	0.105	0.00646	0.000	0.82	0.002
1776–1813 (b)	UC	0.098	0.00713	0.002	0.43	0.002
	C1	0.024	0.00692	0.034	0.64	0.001
	C2	0.120	0.00717	0.002	0.46	0.006
	C4	0.024	0.00672	0.031	0.68	0.001
1813–1864 (c)	UC	0.019	0.00513	0.027	0.20	0.027
	C1	0.018	0.00326	0.002	0.75	0.000
	C2	0.019	0.00524	0.031	0.21	0.083
	C4	0.020	0.00338	0.002	0.76	0.000
1865–1913 (c)	UC	0.021	0.00197	0.000	0.67	0.000
	C1	0.034	0.00201	0.000	0.87	0.000
	C3	0.027	0.00281	0.000	0.80	0.000
	C5	0.039	0.00263	0.000	0.88	0.000
1913–1932 (c)	UC	0.000	0.00536	0.998	0.00	0.998
	C1	0.028	0.00879	0.023	0.32	0.051
	C3	0.000	0.00644	0.996	0.20	0.353
	C5	0.023	0.00948	0.066	0.41	0.122
1932–1955 (c)	UC	0.069	0.00388	0.000	0.78	0.000
	C1	0.071	0.00870	0.001	0.80	0.000
	C3	0.057	0.00423	0.000	0.83	0.000
	C5	0.069	0.00845	0.001	0.84	0.000
1955–1980 (c)	UC	0.095	0.00554	0.000	0.66	0.000
	C1	0.135	0.00604	0.000	0.71	0.000
	C3	0.103	0.00616	0.000	0.67	0.000
	C5	0.115	0.00691	0.000	0.71	0.001

Note: Following formulas 2 and 3. (a) 17 counties; (b) 20 counties; (c) 24 counties. UC = Unconditional model; C1 = Conditional model 1: NUTS; Conditional model 2: the relative size of the urban population; C3 = Conditional model 3: the relative size of the urban population + the relative size of the industrial labour force + total migration rate; Conditional model 4: C1 + C2; Conditional model 5: C1 + C3.

Table 3. Beta-convergence: real wages.

Period	Model	Conv. rate	S.E.	P > |t|	R^2	Prob > F
The long run
1757–1980 (a)	UC	0.0143	0.00015	0.000	0.98	0.000
	C1	0.0141	0.00015	0.000	0.98	0.000
	C2	0.0137	0.00015	0.000	0.98	0.000
	C4	0.0131	0.00015	0.004	0.99	0.000
1813–1980 (c)	UC	0.0382	0.00033	0.000	0.94	0.000
	C1	0.0283	0.00035	0.000	0.95	0.000
	C2	0.0339	0.00034	0.000	0.94	0.000
	C4	0.0219	0.00036	0.000	0.95	0.000
1865–1980 (c)	UC	0.0412	0.00063	0.000	0.90	0.000
	C1	0.0274	0.00077	0.000	0.91	0.000
	C3	0.0270	0.00057	0.000	0.95	0.000
	C5	0.0216	0.00095	0.000	0.92	0.000
Moran’s I (1865–1980)	UC	Chi 2=	0.00	Prob. HO	0.9493
	C1	Chi 2=	0.30	Prob. HO	0.5854
	C3	Chi 2=	0.81	Prob. HO	0.3677
	C5	Chi 2=	0.28	Prob. HO	0.3804
Sub-period
1757–1776 (a)	UC	0.1098	0.00504	0.000	0.85	0.000
	C1	0.1083	0.00582	0.000	0.84	0.000
	C2	0.1086	0.00576	0.000	0.82	0.000
	C4	0.1120	0.00616	0.000	0.84	0.000
1776–1813 (b)	UC	0.0150	0.00748	0.141	0.12	0.141
	C1	0.0190	0.00678	0.061	0.44	0.023
	C2	0.0206	0.00758	0.074	0.21	0.138
	C4	0.0256	0.00621	0.018	0.58	0.008
1813–1864 (c)	UC	0.0213	0.00371	0.002	0.26	0.002
	C1	0.0147	0.00298	0.000	0.68	0.000
	C2	0.0207	0.00384	0.003	0.36	0.009
	C4	0.0148	0.00319	0.004	0.68	0.000
1865–1913 (c)	UC	0.0285	0.00267	0.000	0.61	0.000
	C1	0.0327	0.00221	0.000	0.84	0.000
	C3	0.0386	0.00301	0.000	0.80	0.000
	C5	0.0342	0.00267	0.000	0.87	0.000
1913–1932 (c)	UC	0.0042	0.00648	0.542	0.02	0.542
	C1	0.0310	0.00877	0.015	0.35	0.033
	C3	0.0064	0.00834	0.479	0.24	0.238
	C5	0.0297	0.00967	0.031	0.47	0.060
1932–1955 (c)	UC	0.0875	0.00511	0.000	0.71	0.000
	C1	0.0417	0.00951	0.011	0.74	0.000
	C3	0.0749	0.00611	0.000	0.78	0.000
	C5	0.0446	0.00989	0.012	0.79	0.000
1955–1980 (c)	UC	0.0479	0.00669	0.000	0.44	0.000
	C1	0.0466	0.00645	0.000	0.53	0.002
	C3	0.0548	0.00755	0.001	0.46	0.014
	C5	0.0496	0.00715	0.001	0.57	0.014

Note: See Table 2.

Table 4. Beta convergence from panel regressions: annual nominal wages.

	(1)	(2)	(3)	(4)	(5)	(6)
	1757–1945	1757–1776	1776–1813	1813–1864	1865–1913	1913–1932
Fixed effects
Lagged ln nominal wage	0.820***	0.593***	0.653***	0.770***	0.611***	0.583***
	(0.0226)	(0.0531)	(0.0367)	(0.0279)	(0.0352)	(0.0373)
Constant	0.392***	0.830***	0.904***	1.054***	1.794***	2.304***
	(0.0718)	(0.136)	(0.0942)	(0.118)	(0.167)	(0.203)
Convergence rate (%)	20	52	43	26	49	54
County FE	YES	YES	YES	YES	YES	YES
Year FE	YES	YES	YES	YES	YES	YES
R-squared	0.995	0.727	0.961	0.898	0.926	0.988
System GMM
Lagged ln nominal wage	0.809***	0.787***	0.771***	0.775***	0.906***	0.970***
	(0.0456)	(0.0932)	(0.0493)	(0.0383)	(0.0171)	(0.00749)
Constant	0.378***	0.422**	0.637***	1.030***	0.470***	0.178***
	(0.0915)	(0.183)	(0.126)	(0.158)	(0.0903)	(0.0406)
Convergence rate (%)	21	24	26	25	10	3
Wages instrumented	Lag 2	Lag 2	Lag 2	Lag 2	Lag 2	Lag 2
Year FE	YES	YES	YES	YES	YES	YES
Observations	4,282	334	799	1,247	1,176	480
Number of county	24	19	23	24	24	24

Note: Robust standard errors. Second lags of the levels and differences used as instruments. One-step estimates are reported.

***p < 0.01, **p < 0.05, * p < 0.1.

Table 5. Beta convergence from panel regressions: annual real wages.

	(1)	(2)	(3)	(4)	(5)	(6)
	1757–1945	1757–1776	1776–1813	1813–1864	1865–1913	1913–1932
Fixed effects
Lagged ln nominal wage	0.786***	0.529***	0.561***	0.715***	0.579***	0.597***
	(0.0273)	(0.0636)	(0.0298)	(0.0359)	(0.0362)	(0.0421)
Constant	0.987***	2.230***	2.284***	1.549***	2.270***	2.424***
	(0.155)	(0.347)	(0.152)	(0.175)	(0.197)	(0.245)
Convergence rate (%)	24	64	58	34	55	52
County FE	YES	YES	YES	YES	YES	YES
Year FE	YES	YES	YES	YES	YES	YES
R-squared	0.955	0.599	0.722	0.752	0.895	0.786
System GMM
Lagged ln nominal wage	0.731***	0.768***	0.607***	0.707***	0.821***	0.963***
	(0.0530)	(0.0812)	(0.0587)	(0.0577)	(0.0247)	(0.00917)
Constant	1.183***	1.039**	2.008***	1.483***	1.016***	0.174***
	(0.267)	(0.417)	(0.297)	(0.287)	(0.131)	(0.0565)
Convergence rate (%)	31	26	50	35	20	4
Wages instrumented	Lag 2	Lag 2	Lag 2	Lag 2	Lag 2	Lag 2
Year FE	YES	YES	YES	YES	YES	YES
Number of county	24	19	23	24	24	24
Observations	4,282	334	799	1,247	1,176	480

Note: Robust standard errors. Second lags of the levels and differences used as instruments. One-step estimates are reported.

***p < 0.01, **p < 0.05, *p < 0.1.

Table 6. Periods of convergence and divergence of regional wages in agriculture.

Study	Country	Convergence	Stable/divergence
Hunt (1973)	Britain	1867/70–1898
Jörberg and Bengtsson (1981)	Sweden		1835/44–1890/99
Söderberg (1985)	Sweden		1840–1910
	Britain	1840–1910
Boyer and Hatton (1997)	Britain		1855–1903
Heikkinen (1997)	Finland	1886–1913
Enflo et al. (2014)	Sweden	1860–1913	1913–1930
		1930–1940
This study	Sweden	1757–1813	1813–1864
		1865–1913	1913–1932
		1932–1980

Figure 2. Annual growth rates of nominal county wages in 1813–1980 vs. the log of nominal county wages in 1813.

Figure 3. Annual growth rates of real county wages in 1813–1980 vs. the log of real county wages in 1813.

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