Real wages in the period of the Industrial Revolution in Japan : a comparative economic history approach

Abstract

It is well known since the "standard of living controversy" that real wages of unskilled workers did not rise much (less than 1% per year) in Britain nor in the United States for a long time following the Industrial Revolution. It was believed that in Japan real wages of unskilled workers were also stagnant. The miserable life of female workers in the textile industries have often been cited, a situation for which capitalists and employers are condemned. In the literature of economic development, an unlimited supply of labor was believed to have existed before World War I. In this paper, it is shown that the stagnation thesis has been "proven" by the wrong estimates of real wages, wrong mainly because they were deflated by inappropriate price indices. If the correct deflator is used, the rate of increase of female real wages is shown to have been as high as 2.5% per year and that for male workers 1.6% per year between 1885 and 1915. In the latter half of the Meiji period, the standard of living of the masses was low, but it was rising rapidly. It is asserted that the nearly free trade under the "Unequal Treaties" and the hands-off attitude of the government, except in infrastructure, education, and the importation of foreign knowledge, led to an almost neoclassical growth centering in labor-intensive industries according to the Heckscher-Ohlin theorem.