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Why England? Demographic factors, structural change and physical capital accumulation during the Industrial Revolution

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Author Info
Nico Voigtländer
Hans-Joachim Voth

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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-Weil (2000) and Galor-Moav (2002) captures the key features of the transition from stagnation to growth over time. Yet we know remarkably little about why industrialization occurred so 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 capital deepening and the use of more differentiated capital inputs. 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. The paper explores one additional aspect of inequality in the transition to the Post-Malthusian economy – the availability of nutrition for poorer segments of society. We examine the influence of redistributive institutions such as the Old Poor Law, and find they were not decisive in fostering industrialization. Simulations using parameter values for other countries show that Britain’s early escape was only partly due to chance. France could have attained a greater workforce in manufacturing than Britain, but the probability was less than 30 percent. Contrary to recent claims in the literature, 18th century China had only a minimal chance to escape from Malthusian constraints.

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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c011_003.

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Length: 51 pages
Date of creation: Jun 2006
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Handle: RePEc:deg:conpap:c011_003

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Keywords: Industrial Revolution Unified Growth Theory Endogenous Growth Transition Calibration British Economic Growth before 1850

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Find related papers by JEL classification:
E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation
N13 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - Europe: Pre-1913
N33 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - Europe: Pre-1913
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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  1. Industrial Sociology (FCT-UNL)
References listed on IDEAS
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Cited by:
(explanations, 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.)

  1. Hernando Zuleta, 2008. "Seasons, savings and GDP," DOCUMENTOS DE TRABAJO 004592, UNIVERSIDAD DEL ROSARIO - FACULTAD DE ECONOMÍA. [Downloadable!]
  2. Broadberry, Stephen, 2007. "Recent Developments In The Theory Of Very Long Run Growth : A Historical Appraisal," The Warwick Economics Research Paper Series (TWERPS) 818, University of Warwick, Department of Economics. [Downloadable!]
  3. Quamrul Ashraf & Oded Galor, 2008. "Dynamics and Stagnation in the Malthusain Epoch: Theory and Evidence," Working Papers 2008-14, Brown University, Department of Economics. [Downloadable!]
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