UNDERSTANDING PER-CAPITA INCOME GROWTH IN PREINDUSTRIAL EUROPE

Abstract

In a Malthusian environment, per-capita incomes are stagnant, meaning they cannot exhibit sustained growth. However, they can still display volatility and persistence when hit by shocks. This article simulates a Malthusian model with realistic life-cycle structure and stochastic and accelerating growth in land productivity. We find that differences across simulated economies are quantitatively similar to those found in recently compiled data over GDP per capita for several European countries before 1800. This speaks to the relevance of the Malthusian model for understanding preindustrial development in Europe, contrasting with contentions to the contrary in some of the existing literature.