Engels' pause: Technical change, capital accumulation, and inequality in the british industrial revolution
AbstractThe paper reviews the macroeconomic data describing the British economy from 1760 to 1913 and shows that it passed through a two stage evolution of inequality. In the first half of the 19th century, the real wage stagnated while output per worker expanded. The profit rate doubled and the share of profits in national income expanded at the expense of labour and land. After the middle of the 19th century, real wages began to grow in line with productivity, and the profit rate and factor shares stabilized. An integrated model of growth and distribution is developed to explain these trends. The model includes an aggregate production function that explains the distribution of income, while a savings function in which savings depended on property income governs accumulation. Simulations with the model show that technical progress was the prime mover behind the industrial revolution. Capital accumulation was a necessary complement. The surge in inequality was intrinsic to the growth process: technical change increased the demand for capital and raised the profit rate and capital's share. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation. After the middle of the 19th century, accumulation had caught up with the requirements of technology and wages rose in line with productivity.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Explorations in Economic History.
Volume (Year): 46 (2009)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622830
British industrial revolution Kuznets curve Inequality Savings Investment;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- R. V. Jackson, 1987. "The structure of pay in nineteenth-century Britain," Economic History Review, Economic History Society, vol. 40(4), pages 561-570, November.
- Gregory Clark, 2007.
"Introduction to A Farewell to Alms: A Brief Economic History of the World
[A Farewell to Alms: A Brief Economic History of the World]," Introductory Chapters, Princeton University Press.
- Turner,M. E. & Beckett,J. V. & Afton,B., 1997. "Agricultural Rent in England, 1690–1914," Cambridge Books, Cambridge University Press, number 9780521450539, December.
- Broadberry, Stephen; Van Leeuwen, Bas, 2010. "British Economic Growth and the Business Cycle, 1700-1870: Annual Estimates," CAGE Online Working Paper Series 20, Competitive Advantage in the Global Economy (CAGE).
- Temin, Peter, 1997. "Two Views of the British Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 57(01), pages 63-82, March.
- Sokoloff, Kenneth L., 1984. "Was the transition from the artisanal shop to the nonmechanized factory associated with gains in efficiency?: Evidence from the U.S. Manufacturing censuses of 1820 and 1850," Explorations in Economic History, Elsevier, vol. 21(4), pages 351-382, October.
- Allen, Robert C., 2001. "The Great Divergence in European Wages and Prices from the Middle Ages to the First World War," Explorations in Economic History, Elsevier, vol. 38(4), pages 411-447, October.
- Daron Acemoglu, 2000.
"Labor- and Capital- Augmenting Technical Change,"
NBER Working Papers
7544, National Bureau of Economic Research, Inc.
- Williamson, Jeffrey G., 1990. "The impact of the Corn Laws just prior to repeal," Explorations in Economic History, Elsevier, vol. 27(2), pages 123-156, April.
- Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
- McAdam, Peter & Willman, Alpo, 2013. "Medium Run Redux," Macroeconomic Dynamics, Cambridge University Press, vol. 17(04), pages 695-727, June.
- Robert Allen & Robert C. Allen, 2007. "Pessimism Preserved: Real Wages in the British Industrial Revolution," Economics Series Working Papers 314, University of Oxford, Department of Economics.
- Berndt, Ernst R, 1976. "Reconciling Alternative Estimates of the Elasticity of Substitution," The Review of Economics and Statistics, MIT Press, vol. 58(1), pages 59-68, February.
- Kevin H. O'Rourke & Jeffrey G. Williamson, 2001. "Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592, January.
- Oded Galor & Omer Moav, 2006.
"Das Human-Kapital: A Theory of the Demise of the Class Structure,"
Review of Economic Studies,
Oxford University Press, vol. 73(1), pages 85-117.
- Oded Galor & Omer Moav, 2004. "Das Human Kapital: A Theory of the Demise of the Class Structure," GE, Growth, Math methods 0410003, EconWPA.
- Feinstein, Charles H., 1998. "Pessimism Perpetuated: Real Wages and the Standard of Living in Britain during and after the Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 58(03), pages 625-658, September.
- Harley, C. Knick, 2012. "Was technological change in the early Industrial Revolution Schumpeterian? Evidence of cotton textile profitability," Explorations in Economic History, Elsevier, vol. 49(4), pages 516-527.
- Koyama, Mark, 2012. "The Law and Economics of Private Prosecutions in Industrial Revolution England," MPRA Paper 40500, University Library of Munich, Germany.
- Miguel Martín-Retorillo & Vincente Pinilla, 2012. "Why did agricultural labour productivity not converge in Europe from 1950 to 2005?," Working Papers 0025, European Historical Economics Society (EHES).
- Toms, Steven & Shepherd, Alice, 2013. "Creative accounting in the British Industrial Revolution: Cotton manufacturers and the ‘Ten Hours’ Movement," MPRA Paper 51478, University Library of Munich, Germany.
- Robert Allen & Robert C. Allen, 2011. "Technology and the Great Divergence," Economics Series Working Papers 548, University of Oxford, Department of Economics.
- Mark Koyama, 2012.
"Prosecution Associations in Industrial Revolution England: Private Providers of Public Goods?,"
The Journal of Legal Studies,
University of Chicago Press, vol. 41(1), pages 95 - 130.
- M Koyama, 2011. "Prosecution Associations in Industrial Revolution England: Private Providers of Public Goods?," Centre for Historical Economics and Related Research at York (CHERRY) Discussion Papers 11/01, CHERRY, c/o Department of Economics, University of York.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.