The presentation and analysis of a cost of living index and of different wage indices for the city of Madrid, covering the period 1680-1800 is the essential aim of this article. The accounts books of several charitable institutions have been the basic source of information for this research. The main conclusions of the work are as follows: 1) in the eighteenth century the evolution of prices in Madrid was quite similar to those in most western and central European cities; 2) yearly fluctuations in the cost of living were lower in Madrid than Palencia, Toledo and Seville; 3) in the second half of that century, Madrid was one of the cities of the old continent which showed the most abrupt fall in the wages of unskilled workers; 4) during the eighteenth century, the ‚'skill premium' increased quite noticeably in the Madrid service sector; and 5) the wage differential between men and women fell in that century, due, probably, to the considerable raise in the weight of female work in the important domestic service sector in Madrid
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