This review article examines the development of state capacity—the extractive and productive power of states— in European history. To explain the historical evolution of state capacity, I focus on the role of political innovations. I relate state capacity improvements to long-run economic growth and the establishment of twentieth-century welfare states. The article concludes with historical lessons for developing nations today.

As a result of recent advances in historical national accounting, estimates of GDP per capita are now available for a number of European economies back to the medieval period, including Britain, the Netherlands, Italy, and Spain. The approach has also been extended to Asian economies, including India and Japan. So far, however, China, which has been at the center of the Great Divergence debate, has been absent from this approach. This article adds China to the picture, showing that the Great Divergence began earlier than originally suggested by the California School, but later than implied by older Eurocentric writers.

This article analyzes rural-urban migration in Great Britain in the latter half of the nineteenth century. Using a new dataset of 28,000 individuals matched between the 1851 and 1881 population censuses, I examine the selection process and treatment effect of migration, controlling for the endogeneity of the migration decision. I find that urban migrants were positively selected—the best of the rural labor pool—and that the economic benefits of migration were substantial. Migrants responded to market signals, and labor markets were largely efficient; however, not all gains from migration were exploited, potentially indicating some degree of inefficiency.

The role of law in relation to social change is not well understood. One reason for our ignorance is the lack of evidence on the causal role of legislation. Too often the efforts at social reform and the intended consequences of legislation are accepted as proof that behavior has been significantly altered. A case in point is legislation that compels children to attend school. Although it is commonly believed that such laws have been effective in increasing the participation of children in schooling systems in the United States over the last 100 years, there is little evidence to support or reject this belief. Some persons have questioned whether these laws have been the cause or the result of observed increases in school attainment. Still others have doubted the degree to which compulsory schooling laws have been enforced. Reports of widespread truancy in urban schools today call into question not only present enforcement difficulties but also whether these laws were effectively enforced from their inception in the nineteenth century. Yet, in spite of the contemporary and historical interest in compulsory school attendance laws, the basic question remains unanswered: what has been the effect, if any, of these laws on school enrollment and attendance?

This article analyzes the determinants of local institutions in Brazil. We show that institutional quality and distribution of land are partly inherited from the colonial histories experienced by different areas of the country. The sugar cane boom—characterized by an oligarchic society—is associated with more land inequality. The gold boom—characterized by a heavily inefficient presence of the Portuguese state—is associated with worse governance and access to justice. We do not find similar effects for a postcolonial boom (coffee). We also find that the colonial episodes are correlated with lower provision of public goods.

Chain migration was an important factor in European migrants' decisions in the nineteenth century. This article demonstrates that previous migrations have long-run effects and continue to impact the decisions of future migrants for many years. Chain migration produces not only more migration but different migrants. Migrants from over 1,300 different German villages are classified as networked and non-networked. The most definitive results from comparing the two types of migrants are the figures on cash assets because they support the model's prediction that socially networked migrants needed less cash than non-networked migrants to accomplish their migration goals.

In an earlier article, I pleaded for a reappraisal of the Old Poor Law. Despite what all the books say, the evidence that we have does not suggest that the English Poor Law as it operated before its amendment in 1834 reduced the efficiency of agricultural workers, promoted population growth, lowered wages, depressed rents, destroyed yeomanry, and compounded the burden on ratepayers. Beyond this purely negative argument, I tried to show that the Old Poor Law was essentially a device for dealing with the problems of structural unemployment and substandard wages in the lagging rural sector of a rapidly growing but still underdeveloped economy. It constituted, so to speak, “a welfare state in miniature,” combining elements of wage-escalation, family allowances, unemployment compensation, and public works, all of which were administered and financed on a local level. Far from having an inhibitory effect, it probably contributed to economic expansion. At any rate, from the economic point of view, things were much the same after 1834 as before. The Poor Laws Amendment Act of 1834 marked a revolution in British social administration, but it left the structure of relief policy substantially unchanged.

This examination of official commercial statistics suggests that the conventional wisdom regarding early free-trade efforts of Britain and France is wrong. French average tariff levels were, surprisingly, consistently below those of Britain throughout most of the nineteenth century, even after the abolition of the Corn Laws and before passage of the 1860 Treaty of Commerce. Previous scholarship has focused on French commercial policies covering a narrow range of items and has largely ignored the overall trade policies of both nations. This study moves us further away from stories of development and trade confined to a few “leading”sectors.

Was colonization costly for France? Did French taxpayers contribute to colonies’ development? This article reveals that French West Africa's colonization took only 0.29 percent of French annual expenditures, including 0.24 percent for military and central administration and 0.05 percent for French West Africa's development. For West Africans, the contribution from French taxpayers was almost negligible: mainland France provided about 2 percent of French West Africa's revenue. In fact, colonization was a considerable burden for African taxpayers since French civil servants’ salaries absorbed a disproportionate share of local expenditures.

It is with some diffidence that I submit the following notes which I have not been able to work up into a fully developed argument. The inartistic use of numerals has been resorted to in order to mark off clearly the various problems touched upon.

In so far as the term “profit” has any fairly concrete and generally understood meaning, it designates the income accruing to the owner of a business or productive “enterprise,” through the operations of that business or enterprise. The owner may be an individual or a group, organized in some way as a legal entity; most typically, it is a “corporation,” particularly under American conditions. In either case, this owner, who normally hires productive services from others for a fixed compensation, uses them to make a product and sells the product for what he can get, is what is meant by an entrepreneur. He (or it) is the responsible controller or manager of the business in relation to market conditions, regardless of whomever he may consult or whatever functions he may delegate to others or on whatever terms. In business usage, profit is the entrepreneur's net income, what remains out of the gross proceeds of the business after paying the hired labor and capital at the agreed rates, determined by market competition (and after deducting costs of materials and “products” bought from others). It is thus a “residual” income, what is left after other distributive shares are removed, and may be positive or negative. But profit, so defined—when there is a positive profit, and not a loss—evidently consists to a greater or less extent of the remuneration for services furnished to the business by the entrepreneur himself—labor or capital services, or both. For analytical purposes, the economic theorist must define profit more narrowly, as what is or would be left (“residual”) after deducting wages and/or interest at the “going rates” for the entrepreneur's own services.

It is widely agreed that the burden of housework in the industrialized West did not decrease as much as might be expected since 1880, and may have actually increased for long periods. The article proposes a new explanation: that increases in knowledge on the causes and transmission mechanisms of infectious diseases persuaded women that household members' health depended on the amount of housework carried out. The article traces the origin of this knowledge in the scientific developments of the nineteenth century and describes the mechanisms by which households were persuaded to allocate more time and resources to housework.

There are two views of the British Industrial Revolution in the literature today. The more traditional description sees the Industrial Revolution as a broad change in the British economy and society. This broad view of the Industrial Revolution has been challenged by Crafts and Harley who see the Industrial Revolution as the result of technical change in only a few industries. This article presents a test of these views using the Ricardian model of international trade with many goods. British trade data are used to implement the test and discriminate between the two views of the Industrial Revolution.

Members of a patent pool agree to use a set of patents as if they were jointly owned by all members and license them as a package to other firms. This article uses the example of the first patent pool in U.S. history, the Sewing Machine Combination (1856–1877) to perform the first empirical test of the effects of a patent pool on innovation. Contrary to theoretical predictions, the sewing machine pool appears to have discouraged patenting and innovation, in particular for the members of the pool. Data on stitches per minute, an objectively quantifiable measure of innovation, confirm these findings.

This article evaluates the consistency of the NBER business cycle reference dates. It finds that the early reference dates are derived from detrended data, whereas the dates after 1927 are derived from data in levels. To evaluate the importance of this and other changes in technique, I derive a simple algorithm that matches the postwar NBER peaks and troughs closely. When this algorithm is applied to data for 1884 to 1940, the new prewar dates differ systematically from the NBER dates and challenge the conventional view that recessions have gotten shorter over time.

We examine the relationships between warfare, taxation, and political change in the context of the political unification of the Italian peninsula. Using a comprehensive new database, we argue that external and internal threat environments had significant implications for the demand for military strength, which in turn had important ramifications for fiscal policy and the likelihood of constitutional reform and related improvements in the provision of nonmilitary public services. Our analytic narrative complements recent theoretical and econometric works about state capacity. By emphasizing public finances, we also uncover novel insights about the forces underlying state formation in Italy.

Three factors help to explain why school enrollments in the Northern United States were higher than those in the South and in most of Europe by 1850. One was affordability: the northern schools had lower direct costs relative to income. The second was the greater autonomy of local governments. The third was the greater diffusion of voting power among the citizenry in much of the North, especially in rural communities. The distribution of local political voice appears to be a robust predictor of tax support and enrollments, both within and between regions. Extra local voice raised tax support without crowding out private support for education.

The scholars of continental Europe have devoted much attention to the social consequences of rules and customs of inheritance, and there exists a large body of work on this subject by lawyers and agricultural historians. The purpose of this paper is to consider, in the light of this European evidence, the possible significance of such rules and customs for economic development in the nineteenth century.