Wage Convergence and Divergence in East Asia, 1900-39

This study calculates Robert Allen's "welfare ratio" for eleven cities in Japan, Korea, Manchuria, and Taiwan from 1900-39. Although considerable gap in prices and nominal wages existed, real wages remained roughly comparable in the 1910s in different cities of East Asia outside Manchuria, where unskilled workers enjoyed substantially higher living standards. Interwar decades saw real wage grow at different speeds in East Asian cities, causing both convergence, e.g. between Dairen and Tokyo, and divergence, e.g. between Beijing and Taipei. Workers in various cities of East Asia fared differently, primarily because productivity advanced at distinct speeds depending upon the amount of human capital available.