Authors: Tancredi Buscemi (LUMSA University) and Leonardo Ridolfi (University of Siena)
Venice has long been central to interpretations of Italy’s early modern decline (Cipolla 1952), shaping assessments of real wages across Italian regions. Yet a long-run perspective on the Republic has remained elusive. Was Venice’s long seventeenth century marked by a generalised decline in real wages or by uneven spatial adjustment?
Using new wage and price series for Venice and its Terraferma, we reconstruct the evolution of real wages for building and agricultural workers from the late Middle Ages to the eve of the Republic’s fall. Two main results emerge. First, plague shocks repeatedly disrupted the integration of urban and rural labour markets. Second, adopting a series of methodological improvements in the estimation of differences between rural and urban real wages substantially revises the long-run picture of living standards.
Why rural wages matter for big debates
Much of our knowledge of pre-industrial real wages is derived from data for major cities. This emphasis reflects the greater availability of urban sources, but it also comes at a cost. If rural and urban labour markets were only loosely integrated, urban wages offer a noisy picture of average incomes and of the living standards of the majority of the population.
This issue matters for two classic debates. The first concerns the timing and nature of north-central Italy’s early modern crisis, and whether Venice experienced a sharp collapse or, as some scholars have argued, a more gradual “gentle transition” (Rapp 1976). The second relates to the Little Divergence debate, which seeks to explain why wage trajectories diverged within Europe (Allen 2001). Here, too, the data at disposal remain heavily urban, while systematic evidence on rural wages is still scarce.
New series from Venice and its countryside
We construct the first long-run series of real wages for skilled and unskilled building workers and for agricultural workers in Venice and the Terraferma from 1390 to 1790. We combine daily wages with consumer prices to compute welfare ratios. The key challenge is comparability across very different environments. The standard Allen’s basket (2001) was designed for large cities and fits Venice reasonably well. Still, it can be misleading when applied to rural settings where diets, household structures, and housing arrangements differ.
Plague shocks and the opening of the wage gap
Up to the mid-sixteenth century, real wages in Venice and the Terraferma moved in broadly similar cycles. After that, the relationship changed sharply. The 1575-77 plague hit the city much harder than the countryside. This asymmetric demographic shock altered labour market conditions in ways that reduced the rural–urban gap temporarily. A second turning point comes with the 1629-31 plague, which was more pervasive. In its aftermath, urban wages recovered more strongly while rural wages lagged, so the wage gap widened and peaked around the mid-seventeenth century. After about 1650, the gap gradually narrowed again, reflecting divergent demographic recoveries, changing consumption patterns, and differences in construction cycles between city and countryside.
Notes: series are smoothed with a 25 year-centered moving averages. All series are estimated using the baseline basket.
Why method matters: maize, households, and rents
To make welfare ratios more comparable across city and countryside, we refine Allen’s standard approach in four respects: (i) we build separate urban and rural price indices rather than assuming perfectly integrated commodity markets; (ii) we use dynamic baskets to capture the spread of maize in the countryside; (iii) we allow for differences in household composition over time; and (iv) we explore the sensitivity of results to rural-urban differences in housing costs. A key message is that once all these factors are taken into account, real wages in the Terraferma look far more resilient and stable than previously held.
Figure 2. Building labourers’ welfare ratios: gap Venice/Terraferma (Panel A), welfare ratios in Venice (Panel B) and welfare ratios in the Terraferma (Panel C)
Notes: series are 25 year-centered moving averages.
What does this change in the debate?
Taken together, the results support a more spatially differentiated view of Venice’s trajectory. Seventeenth-century shocks did not translate into a uniform wage decline across the Republic. Instead, they repeatedly reshaped the degree of rural–urban integration, generating a real-wage gap whose evolution closely tracks the geography and severity of demographic crises. More broadly, these results indicate that methodological refinements and an analytical focus extending beyond major cities can substantially alter our understanding of Italy’s early modern decline and the Little Divergence.
References
Alfani, G. (2013). Plague in seventeenth-century Europe and the decline of Italy: an epidemiological hypothesis. European Review of Economic History, 17(4), 408-430.
Allen, R. C. (2001). The great divergence in European wages and prices from the Middle Ages to the First World War. Explorations in Economic History, 38(4), 411-447.
Cipolla, C. M. (1952). The decline of Italy: the case of a fully matured economy. The Economic History Review, 5(2), 178-187.
Rapp, R. T. (1976). Industry and economic decline in seventeenth-century Venice. Harvard University Press.