Merchant Guilds in 1890

Adresnaia kniga odesskikh 1 i 2 gil’dii kuptsov. 1890–1891 [A Directory of Merchants of the First and Second Guild in Odessa. 1890–1891]. Odessa, 1890.

Spravochnaia kniga o litsakh, poluchivshikh na 1890 g. kupecheskie svidetel’stva po 1 i 2 gil’diiam v Moskve [A Directory of Individuals Who Obtained a Merchant Certificate of the First and Second Guild in Moscow as of 1890]. Moscow: Tipografiia A. G. Kol’chugina, 1890.

Spravochnaia kniga o litsakh sankt­peterburgskogo kupechestva i drugikh zvanii, poluchivshikh v techenie vremeni s 1 noiiabria 1889 po 1 fevralia 1890 g. svidetel’stva i bilety po 1 i 2 gil’diiam na pravo torgovli i promyslov [A Directory of St. Petersburg Merchants and Other Individuals Who Obtained a Merchant Certificate of the First and Second Guild Between November 1, 1889 and February 1, 1890]. St. Petersburg: Gosudarstvennaia tipografiia, 1890.

CHAPTER 3

Labor Mobility Restrictions and Urban Growth: Evidence from the

Russian Empire

3.1

Introduction

“Understanding serfdom is …necessary if one wishes to understand divergence or convergence in the long­term growth performance of European societies” (Ogilvie and Carus,2014, p. 483). In this paper, we focus on the direct, yet understudied, mechanism whereby serfdom may have affected economic development: restrictions on mobility of labor. In the Russian Empire, twenty­three million people, who were serfs in 1858 and were not allowed to move to cities, were freed in the following twelve years. Was removal of the mobility restrictions a major factor in the subsequent urban growth?

The answer to this question is theoretically ambiguous. Migration to a city is preferred to staying in the countryside if: 1) the wages in the urban sector are higher than in the agricultural sector; 2) the city is a generally more attractive place to live (e.g., due to access to higher­quality public goods); and 3) the transportation costs of moving are not too high. By imposing constraints on spatial allocation of labor over an extended period of time, serfdom may have affected all three factors. As a first step in our investigation, we develop a structural model of rural­urban migration, in which peasants face the following decision­making problem. They can stay in the countryside or move to one of the existing cities; serfs are only able to move after becoming free. In the model, moving to a particular city can be a preferable option because of the specific features of that city or because cities in general are more attractive to live in. Further, the cost of moving depends on the available modes of transportation. For every period, the model predicts the share of peasants leaving each location in the countryside and the total flow of migrants to each city. Out­migration from the countryside is (partly) compensated by the natural population growth.

We estimate this model using novel detailed data on peasants, cities, and railroads in the Russian Empire, covering the period from 1811 to 1910. Besides Russia proper, this data also includes the Kingdom of Poland and the Grand Duchy of Finland, autonomous regions within the Empire that had distinct historical institutions. The central part of out dataset is a balanced panel of 569 cities with four­ teen cross­sections. Identification of the model’s parameters hinges upon the observed changes in each city’s population between consecutive time periods. The estimated parameters suggest that moving to cities was not advantageous to peasants in and of itself. Instead, the single most important factor ex­ plaining rural­urban migration was construction of railroads. This is likely because allocation of rural labor was not efficient historically, independently from the detrimental, yet relatively smaller, impact of serfdom. Our within­model calculations suggest that by 1910, the total urban population enabled by the railroad network was comparable to that in a counterfactual scenario in which serfdom never ex­ isted. By and large, our findings are consistent with Alexander Gerschenkron’s seminal research on the economic development of the Russian Empire prior to World War I. He argued that, while abolition of serfdom was “an absolute prerequisite for industrialization,” it did not begin until “the railroad building of the state assumed unprecedented proportions and became the main lever of a rapid industrialization policy” (1962, p. 19).1

Our results complement the existing empirical studies of coercive institutions in various historical contexts, from Latin America (Dell, 2010) to Europe (Acemoglu et al., 2011;Buggle and Nafziger, 2018;Markevich and Zhuravskaya,2018) to Southeast Asia (Dell and Olken,2018). Markevich and Zhuravskaya(2018) have argued that abolition of serfdom in the Russian Empire led to increased pro­ ductivity of the agricultural sector due to improved incentives of peasants. Industrial output, measured at the aggregate level, has also increased. Another set of papers has documented persistence of the neg­ ative effects of coercive institutions long after they were abolished (Buggle and Nafziger,2018;Dell, 2010). Among the channels of persistence, three have been highlighted: inferior provision of public goods (especially, transport infrastructure), low human capital accumulation, and path dependence due to agglomeration effects.2

1_{By 1913, Russia’s railroad network became the second­largest in the world in terms of the total track length (The World}

While these and other studies have investigated the effect of coercive institutions on urbanization, or outcomes that are typically associated with it (industrial output), to the best of our knowledge, con­ straints on labor mobilityas such have not yet been examined. This is understandable given the ana­

lytical challenge faced by the researcher: how to define a relevant unit of measurement for individuals who, theoretically, could move anywhere? From a technical viewpoint, measuring coercive institutions at some pre­defined administrative (provincial, district) level or the level created by the researcher (e.g., cell grid) limits potential mobility of rural labor to the areas bounded by the borders of respective units. We believe that in this particular context, any choice of the level of measurement would be ad hoc and cannot be supported by theory. To illustrate the scope of this measurement problem, in the Russian Em­ pire, according to the 1897 Imperial Census, just over half (53.3%) of all urban dwellers were born in the same district, with substantial geographic variation in the percentage of non­locally born (Rashin, 1956, pp. 131–132). This, in turn, could explain some of the ambiguous or null findings regarding the impact of abolition of serfdom (Buggle and Nafziger,2018) and the seemingly unimportant role of mobility constraints for industrialization in Russia (Cheremukhin et al.,2017). In our empirical design, “effective” mobility restrictions are not defined by the chosen level of measurement but rather by the

institutional features (serfdom) and transportation costs, i.e., the historical context itself.

The rest of the paper is organized as follows. In Section 3.2, we provide a brief historical back­ ground and discuss mobility restrictions that existed for various types of rural dwellers in the Rus­ sian Empire. In Section 3.3, we describe the data. In Section 3.4, we discuss a structural model of rural­urban migration, its estimation, and the main results, including counterfactual analysis. The final section concludes.

Geographic coverage Due to computational complexity of our model, which increases exponentially with geographic coverage, and limited data availability in some cases, we confine our analysis to the territory of European Russia, including the steppe part of the North Caucasus, Western Siberia (Tobolsk Province), Finland, and Poland. The remaining part of Western Siberia and entire Eastern Siberia, the mountainous part of the North Caucasus, Transcaucasia, and Central Asia are beyond the scope of the sections that follow.

3.2

Historical Background