Discussion Papers on Economics,
University of Southern Denmark, Department of Economics

Abstract: It is well established that Denmark is one of the richest economies in the world nowadays with high living standards and wages. But what about earlier times? This paper makes three contributions: firstly, it creates and describes a new and rich data set on historical wage developments in Denmark, based on data gathered by the Danish Price History Project for the period 1660‐1800; secondly, it tests the traditional view of Denmark being very poor during that period by offering insight into eighteenth century Danish living standards; and thirdly, it tests whether the country followed the traditional story of the Little Divergence by constructing a long run real wage series for 1500‐1900. Comparing real wages across Europe, I find incomes in the countryside actually converged in the sixteenth century. In this context, Denmark moved from being poor, to an average income level, becoming rich only in the nineteenth century. An analysis of the eighteenth century shows that the value of the skill premium was higher than that of leading countries in Europe, but the gender wage gap tended to close towards the end. Married women in skilled occupations earned more than unmarried ones, but no difference was seen for unskilled occupations.

Keywords: Little Divergence; Denmark; consumer price index; real wages; skill premium; gender gap; casual and full time workers; married/unmarried women; urban/rural workers; living standards

JEL-codes: J30; J40; J80; N33; N93

40 pages, February 6, 2019

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