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The Impact of the 1918 Influenza on Sugar Production in Java

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The Impact of the 1918 Influenza on Sugar Production in Java Economics and Human Biology 42 (2021) 101011 Contents lists available at ScienceDirect Economics and Human Biology journal homepage: www.elsevier.com/locate/ehb A bitter epidemic: The impact of the 1918 influenza on sugar production in Java Daniel Gallardo-Albarrán*, Pim de Zwart Wageningen University, the Netherlands A R T I C L E I N F O A B S T R A C T Article history: Research about the economic consequences of past epidemics has mostly focused on the experience of Received 18 December 2020 industrialized countries, thus providing little knowledge about the effects of health shocks on developing Received in revised form 31 March 2021 economies. We fill this gap by studying the impact of the 1918 influenza in Java, with a new dataset on Accepted 15 April 2021 aggregate food production and district-level figures on (i) sugar production, the major export commodity Available online 20 April 2021 and the predominant source of labour demand; (ii) agricultural and plantation wages, and (iii) annual crude death rates. The mortality impact of the influenza on Java was high, as crude mortality rates JEL classification: doubled in 1918 relative to the preceding years, but its economic impact was mixed. Aggregate food I15 N35 production did not decline, but sugar output did fall in 1919. Indeed, our regional panel data analysis does O15 not establish a direct relationship between regional epidemic mortality variation and sugar output decline. Instead, we hypothesize that economic activity was rediverted towards food production in order Keywords: to avoid famine that could have resulted from the combined effects of disrupted shipping at the end of the fl Spanish in uenza First World War, climatic conditions and the public health crisis. This is supported by both qualitative Epidemic observations and quantitative evidence suggesting that those regions that were highly suitable for rice Mortality production saw a larger reduction in sugar production, and that in regions that had more flexibility in Sugar production land tenure arrangements experienced substantially greater reductions in sugar output. Java © 2021 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). 1. Introduction population, and is thought to have raised wages and led to rising urbanization and development (Postan,1966; Voigtläner and Voth, 1 The COVID-19 pandemic has dramatically impacted citizens 2013). This event also led to substantial declines in wealth and across the world. The hazardous symptoms of this disease, its rapid income inequality, although subsequent plague epidemics, espe- spread and the overburdening of health care facilities have resulted cially those of the 17th century, seemed to have had different in high mortality in a number of countries regardless of their effects (Alfani, 2021; Alfani and Murphy, 2017). A more recent and income level (Roser et al., 2020). The disruptive effects of this highly-disruptive epidemic took place at the beginning of the 20th health crisis have deeply affected the normal functioning of century: the 1918 influenza pandemic. This deadly disease is economies. Countries in Europe and North America have experi- estimated to have taken the lives of about 50 million people enced sharp declines in employment, spending and total income worldwide, mostly young adults, during the period 1918–1920 (Chetty et al., 2020; Conte et al., 2020); and lower-income (Johnson and Mueller, 2002, p. 114), and have caused major countries are suffering similar or worse challenges (World Bank, economic short- and long-term disruptions after the end of the 2020). First World War (e.g. Almond, 2006; Barro et al., 2020; Basco et al., Some of the current economic and health challenges have clear 2021; Beach et al., 2020, 2018; Correia et al., 2020). The parallels with history, since past pandemics also altered funda- predominant focus of this literature on the experience of Western mentally the normal functioning of society. For instance, the Black countries has left unexplored the economic consequences of past 2 Death killed between one third and half of the European pandemics on developing countries. This is problematic because 1 * Corresponding author. Recent real wage estimates downscale the ‘Golden Age of Labor’ following the E-mail addresses: [email protected] (D. Gallardo-Albarrán), Black Death (Humphries and Weisdorf, 2019). 2 [email protected] (P. de Zwart). Some exceptions are Noy et al. (2020) and Fenske et al. (2020). http://dx.doi.org/10.1016/j.ehb.2021.101011 1570-677X/© 2021 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). D. Gallardo-Albarrán and P. de Zwart Economics and Human Biology 42 (2021) 101011 Javanese society that otherwise remain hard to explore. We not only provide a quantification of the economic impact of this major mortality crisis, but also study decisions by producers and the colonial administration as well as the functioning of labour and production markets, with detailed factory-level sugar production and regency-specific wage data. A further added value of our production dataset is that we cover a large number of years before and after 1918. This allows us to examine the economic and demographic dynamics after the epidemic, while carefully 3 controlling for pre-1918 trends. Third, we contribute to Indonesian economic history with the first study to investigate the economic impact of the influenza on the main export sector of the country. We complement long-run economic history analyses of Indonesia (e.g. Booth, 1998; van der Eng, 2010; van Zanden and Marks, 2012), by focussing on the Fig. 1. Death rates and excess mortality, 1912-1924. impact of one particular shock on short-term economic develop- Note: mortality sources are MBGD (1925). The left vertical axis shows average death ment. The Java sugar industry employed about 1 million people rates (per 1,000) and the right vertical axis presents excess mortality calculated by and was therefore by far the largest employer on the island comparing observed death rates in a given year relative to a baseline level. This baseline was estimated for each regency by regressing mortality before 1918 on (Koningsbergen, 1948, p. 388); in the 1920s 10 percent of the total fi fi regency-speci c linear time trends. Point estimates and 90-percent con dence adult male and 3.6 percent of the adult female population worked intervals (vertical bars) were obtained by regressing death rates and excess death in this industry (Bosma and Curry-Machado, 2012, p. 253). The rates on a set of year- and regency-fixed effects, clustering standard errors by value of sugar exports was good for between 40 and 70 percent of regency. total exports in the 1920s (Koningsbergen, 1948, p. 290). By the early 20th century, Java was also the most important supplier of the economic impact of health crises depends on a complex set of sugar on Asian markets (Bosma, 2013, p. 172). fl factors in uencing disease diffusion, public health response and Our analysis proceeds in two steps. First, we analyse the market disruptions that vary substantially across different mortality impact of influenza in 1918 across Java for disaggregated contexts. administrative units. We observe that mortality varied remarkably fi fl We ll this gap by studying the impact of the 1918 in uenza in across the island, since some regencies experienced a 200-percent Java, a relatively densely populated island in the early twentieth increase in crude death rates relative to 1917, while other regions century that was controlled by the Dutch. Its economic activity was witnessed a 20-percent rise. When we put together the epidemic largely dominated by agricultural production (rice, sugar, coffee experience of all regencies, we find that mortality rates stayed and rubber) and most of the population had comparatively low above pre-epidemic levels between 1918 and 1921. average incomes (de Zwart, 2021). The case of Indonesia is In the second step of our analysis, we show that food crop particularly interesting because national accounts estimations cultivation does not decline during the epidemic, following the suggest that material living standards did not fall during the same trend as gross domestic product (GDP) per capita. However, fl – in uenza during the period 1918 1920 (van der Eng, 2010; Fig. 1 the same is not true for sugar production that experiences a below), despite the large mortality rates caused by the epidemic sizeable fall. Between 1918 and 1921, output in this industry (Chandra, 2013; Johnson and Mueller, 2002). How can we reconcile declined between 10 and 25 percent relative to 1917. The decline in these two developments? We hypothesize that in low-income per-hectare output spanned the same period and it reached about agricultural societies, such as colonial Indonesia, resources are 12–15 percent. Using panel data, we establish that the fall was not shifted from non-essential economic activities to essential food correlated with the incidence of the influenza epidemic, consistent production during large mortality crises. To test this, we have with our hypothesis that labour was redistributed from sugar to developed a new dataset about Java with aggregate information on food crop cultivation. fi aggregate food production and regional regency-level gures on (i) Several pieces of evidence further support this idea. First, sugar sugar production, the major export commodity and the predomi- production drops were more acute in regions growing relatively nant source of labour demand; (ii) agricultural and plantation more rice as these crops competed for the same labour. Also, wages, and (iii) annual crude death rates. Furthermore, we regions with more flexibility to cultivate different crops (as a consulted newspapers and detailed colonial reports to understand consequence of the periodical redistribution, or rotation, of lands) the reaction of regional and national colonial administrators to the experienced up to 15 percent lower output levels than regencies fl arrival of in uenza in Java.
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