Urbanisation and Agricultural Productivity: Why Did the Splendour of the Italian Cities in the Sixteenth Century Not Lead to Transition?

Abstract

In this paper, we investigate the relationships among total population, wages and the urban population in the Italian economy during the period 1320-1870. From the late Middle Ages to the Early Modern age (the Italian Renaissance), the prevailing conditions were those of a poor, mainly agricultural economy with rudimentary technology. However, these centuries witnessed considerable growth of urban centres. The question that drives this paper is why the development of Italian cities in the sixteenth century did not lead to sustained growth. Using a vector autoregression (VAR) model, we provide a picture of a trapped economy in which urbanisation was unable to trigger a persistent process of development because migration to cities had negative consequences for rural marginal productivity. The demand for a young and healthy labour force from the urban sector was not adequately supported by the productivity of the agricultural sector, which suffered from a lack of technological innovation.