Poverty or prosperity in northern India? New evidence on real wages, 1590s–1870s†

Abstract

This article introduces a new dataset on wages in northern India (from Gujarat in the west to Bengal in the east) from the 1590s to the 1870s. It follows Allen's subsistence basket methodology to compute internationally comparable real wages to shed light on developments in Indian living standards over time. It adjusts the comparative cost-of-living indices to take into account differences in climate and caloric intake due to variances in heights. The article also discusses the male/female wage gap in northern India. It demonstrates that the ‘great divergence’ started in the late seventeenth century, and widened further after the 1720s and especially after the 1800s. It was subsequently primarily England's spurt and India's stagnation in the first half of the nineteenth century that brought about most serious differences in the standard of living. If the British colonial state is to blame—as often suggested by the literature on India's persistent poverty—the fault lies in its failure to improve the situation after the British became near-undisputed masters of India in 1820.