If you’re interested in economic history, does FRED have some data for you! The graph above features some of the oldest data in FRED: population in England and real wages in the United Kingdom, starting in 1086 and 1210, respectively. The big picture shows how dramatic the Industrial Revolution has been in lifting wages and sustaining a much larger population after centuries of stagnation. In fact, the growth has been so strong that we should have used logarithms in the graph (which we’ve recommended in this blog more than once for long time series). Today, though, we focus on a much shorter period: Notice the sharp drop in population in the 14th century? The slider below the graph lets you change the sample period fairly quickly…as does the click-and-drag method within the graph, which we’ve done to create the graph below to highlight this period.
This sudden and massive drop in population is the Black Death, the catastrophic epidemic of bubonic plague that swept through Europe. Notice something else that is quite particular about this period: Real wages went up substantially and clearly stayed higher for a while. This is very different from the period since the Industrial Revolution, where both wages and population have moved in the same direction. One explanation for this deviation is that the earlier period was an era of scant technological progress where population size was constrained by how much the land could produce. Agriculture was not mechanized in any way and suffered from decreasing returns to scale: Each additional agricultural worker was contributing less to total output than the previous one, and thus the average output (mostly food) per person was lower with higher population. This condition leads to a so-called Malthusian equilibrium where population is limited by food availability and famines control population size.
But then the Black Death came and suddenly wiped out a substantial part of the population. Following the above logic, the marginal agricultural worker suddenly is much more productive and wages are higher. Eventually, population increases back to its previous level, and productivity and wages fall back to their initial levels. But for a generation, the survivors of the epidemic enjoyed a higher-than-normal standard of living. It’s only after the technological progress associated with the Industrial Revolution that the economy managed to break out of this vicious cycle.
How these graphs were created: From the FRED homepage, click on the link in the first line of text that displays the number of series in FRED. (At the time of this writing, that number is 528,000.) Then use the sorting feature at the top right and sort the list by starting observation (“Obs Start”). Check the boxes for the population and weekly earnings data series and click on “Add to Graph.” From the “Edit Graph” panel, open the tab for the wage line. Search for “consumer price index in the United Kingdom” and select the oldest series. (The series ID is CPIUKA, which will save you some time searching.) Apply formula a/b. Finally, from the “Format” tab, move the y-axis of one of the series to the right.
Suggested by Christian Zimmermann.