A Window to the Past: Living Standards in Historical Perspective

Real wages are a convenient, useful, and powerful way to learn how life was like in the past. In this chapter we start by reviewing the methodology behind real wage estimations and their history. Then we look at the how real wages have contributed to shedding light on major issues in economic history such as the onset of modern economic growth, the Great Divergence, and colonialism in the Americas. We continue to explain the limitations and challenges in estimating and interpreting real wages.