Chor, David2020-11-252004-09Chor, Davin. “Institutions, Wages and Inequality: The Case of Europe and its Periphery (1500-1899).” CID Graduate Student Working Paper Series 2004.1, Harvard University, Cambridge, MA, September 2004.https://nrs.harvard.edu/URN-3:HUL.INSTREPOS:37366423This paper explores the long-run relationship between institutions and wage inequality in Europe and its periphery using a two-sector model. When institutions improve, wages rise across the board, thus reducing the costs of rural-urban migration and skills acquisition relative to the expected urban wage. The subsequent increase in the supply of urban craftsmen can in turn lead to a narrowing of the relative gap between skilled and unskilled wages. These predictions are borne out by the historical data. Cities with stronger institutions experienced: (i) higher skilled and unskilled real wages, and (ii) lower levels of urban inequality, as measured by the skilled-unskilled wage ratio.en-USResearch Paper or Report2020-11-25