Why England? Demographic factors, structural change and physical capital accumulation during the Industrial Revolution
| Venue: | J ECON GROWTH |
| Citations: | 30 - 4 self |
BibTeX
@MISC{Voigtländer_whyengland?,
author = {Nico Voigtländer and Hans-Joachim Voth},
title = { Why England? Demographic factors, structural change and physical capital accumulation during the Industrial Revolution},
year = {}
}
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Abstract
Why did England industrialize first? And why was Europe ahead of the rest of the world? Unified growth theory in the tradition of Galor and Weil (2000, American Economic Review, 89, 806–828) and Galor and Moav (2002, Quartely Journal of Economics, 177(4), 1133–1191) captures the key features of the transition from stagnation to growth over time. Yet we know remarkably little about why industrialization occurred much earlier in some parts of the world than in others. To answer this question, we present a probabilistic two-sector model where the initial escape from Malthusian constraints depends on the demographic regime, capital deepening and the use of more differentiated capital equipment. Weather-induced shocks to agricultural productivity cause changes in prices and quantities, and affect wages. In a standard model with capital externalities, these fluctuations interact with the demographic regime and affect the speed of growth. Our model is calibrated to match the main characteristics of the English economy in 1700 and the observed transition until 1850. We capture one of the key features of the British Industrial Revolution emphasized by economic historians — slow growth of output and productivity. Fertility
Keyphrases
structural change demographic factor industrial revolution physical capital accumulation key feature demographic regime observed transition initial escape malthusian constraint capital externality differentiated capital equipment affect wage british industrial revolution english economy capital deepening economic historian slow growth agricultural productivity cause change standard model american economic review quartely journal probabilistic two-sector model main characteristic weather-induced shock growth theory
