Advanced Search
MyIDEAS: Login to save this paper or follow this series

Engel`s Pause: A Pessimist`s Guide to the British Industrial Revolution

Contents:

Author Info

  • Robert Allen
  • Robert C. Allen

Abstract

The 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 nineteenth 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 nineteenth 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 nineteenth century, accumulation had caught up with the requirements of technology and wages rose in line with productivity.

Download Info

If 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.
File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper315.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 315.

as in new window
Length:
Date of creation: 01 Apr 2007
Date of revision:
Handle: RePEc:oxf:wpaper:315

Contact details of provider:
Postal: Manor Rd. Building, Oxford, OX1 3UQ
Email:
Web page: http://www.economics.ox.ac.uk/
More information through EDIRC

Related research

Keywords: British Industrial Revolution; Kuznets Curve; Inequality; Savings; Investment;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Mokyr, Joel, 1988. "Is There Still Life in the Pessimist Case? Consumption during the Industrial Revolution, 1790—1850," The Journal of Economic History, Cambridge University Press, vol. 48(01), pages 69-92, March.
  2. Antràs Pol, 2004. "Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-36, April.
  3. Crafts, Nicholas & Venables, Anthony J., 2001. "Globalization in History: A Geographical Perspective," CEPR Discussion Papers 3079, C.E.P.R. Discussion Papers.
  4. Daron Acemoglu, 2003. "Labor- And Capital-Augmenting Technical Change," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 1-37, 03.
  5. John Komlos, 1999. "On the nature of the Malthusian threat in the eighteenth century," Economic History Review, Economic History Society, vol. 52(4), pages 730-748, November.
  6. Sara Horrell & Jane Humphries, 1995. "Women's labour force participation and the transition to the male-breadwinner family, 1790-1865," Economic History Review, Economic History Society, vol. 48(1), pages 89-117, 02.
  7. N. F. R. Crafts, 1983. "British Economic Growth, 1700-1831: A Review of the Evidence," Economic History Review, Economic History Society, vol. 36(2), pages 177-199, 05.
  8. Robert C. Allen, 1999. "Tracking the agricultural revolution in England," Economic History Review, Economic History Society, vol. 52(2), pages 209-235, 05.
  9. 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.
  10. Maxine Berg & Pat Hudson, 1992. "Rehabilitating the industrial revolution," Economic History Review, Economic History Society, vol. 45(1), pages 24-50, 02.
  11. Allen, Robert C., 2000. "Economic structure and agricultural productivity in Europe, 1300 1800," European Review of Economic History, Cambridge University Press, vol. 4(01), pages 1-25, April.
  12. Harley, C. Knick, 1982. "British Industrialization Before 1841: Evidence of Slower Growth During the Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 42(02), pages 267-289, June.
  13. Mokyr, Joel, 1987. "Has the industrial revolution been crowded out? Some reflections on Crafts and Williamson," Explorations in Economic History, Elsevier, vol. 24(3), pages 293-319, July.
  14. 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.
  15. 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.
  16. Crafts, N. F. R., 1987. "British economic growth, 1700-1850; some difficulties of interpretation," Explorations in Economic History, Elsevier, vol. 24(3), pages 245-268, July.
  17. Horrell, Sara & Humphries, Jane, 1992. "Old Questions, New Data, and Alternative Perspectives: Families' Living Standards in the Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 52(04), pages 849-880, December.
  18. Peter H. Lindert, . "Three Centuries Of Inequality In Britain And America," Department of Economics 97-09, California Davis - Department of Economics.
  19. N. F. R. Crafts & C. K. Harley, 1992. "Output growth and the British industrial revolution: a restatement of the Crafts-Harley view," Economic History Review, Economic History Society, vol. 45(4), pages 703-730, November.
  20. Nicholas Crafts, 2003. "Steam as a general purpose technology: a growth accounting perspective," Economic History Working Papers 22354, London School of Economics and Political Science, Department of Economic History.
  21. Heim, Carol E. & Mirowski, Philip, 1991. "Crowding out: A Response to Black and Gilmore," The Journal of Economic History, Cambridge University Press, vol. 51(03), pages 701-706, September.
  22. Crafts, N. F. R., 1985. "English Workers' Real Wages During the Industrial Revolution: Some Remaining Problems," The Journal of Economic History, Cambridge University Press, vol. 45(01), pages 139-144, March.
  23. Simon Szreter & Graham Mooney, 1998. "Urbanization, Mortality, and the Standard of Living Debate: New Estimates of the Expectation of Life at Birth in Nineteenth-century British Cities," Economic History Review, Economic History Society, vol. 51(1), pages 84-112, 02.
  24. Nicholas Crafts & C. Knick Harley, 2002. "Precocious British industrialization: a general equilibrium perspective," Economic History Working Papers 22368, London School of Economics and Political Science, Department of Economic History.
  25. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
  26. John Komlos, 1993. "The secular trend in the biological standard of living in the United Kingdom, 1730-1860," Economic History Review, Economic History Society, vol. 46(1), pages 115-144, 02.
  27. Humphries, Jane, 1990. "Enclosures, Common Rights, and Women: The Proletarianization of Families in the Late Eighteenth and Early Nineteenth Centuries," The Journal of Economic History, Cambridge University Press, vol. 50(01), pages 17-42, March.
  28. Paul Johnson & Stephen Nicholas, 1995. "Male and female living standards in England and Wales, 1812-1867: evidence from criminal height records," Economic History Review, Economic History Society, vol. 48(3), pages 470-481, 08.
  29. Neal, Larry, 1991. "A Tale of Two Revolutions: International Capital Flows 1789-1819," Bulletin of Economic Research, Wiley Blackwell, vol. 43(1), pages 57-92, January.
  30. 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.
  31. N. F. R. Crafts, 1976. "English Economic Growth in the Eighteenth Century: A Re-Examination of Deane and Cole's Estimates," Economic History Review, Economic History Society, vol. 29(2), pages 226-235, 05.
  32. Williamson, Jeffrey G., 1984. "Why Was British Growth So Slow During the Industrial Revolution?," The Journal of Economic History, Cambridge University Press, vol. 44(03), pages 687-712, September.
  33. Stephen Nicholas & Deborah Oxley, 1993. "The living standards of women during the industrial revolution, 1795-1820," Economic History Review, Economic History Society, vol. 46(4), pages 723-749, November.
  34. Crafts, Nicholas, 2004. "Productivity Growth in the Industrial Revolution: A New Growth Accounting Perspective," The Journal of Economic History, Cambridge University Press, vol. 64(02), pages 521-535, June.
  35. Voth, Hans-Joachim, 2001. "The Longest Years: New Estimates Of Labor Input In England, 1760 1830," The Journal of Economic History, Cambridge University Press, vol. 61(04), pages 1065-1082, December.
  36. Nicholas, Stephen & Steckel, Richard H., 1991. "Heights and Living Standards of English Workers During the Early Years of Industrializations, 1770–1815," The Journal of Economic History, Cambridge University Press, vol. 51(04), pages 937-957, December.
  37. McAdam, Peter & Willman, Alpo, 2013. "Medium Run Redux," Macroeconomic Dynamics, Cambridge University Press, vol. 17(04), pages 695-727, June.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Ten Things Worth Reading, Mostly Economics: February 12, 2010
    by Brad DeLong in Grasping Reality with the Invisible Hand on 2010-02-12 08:18:00
  2. links for 2010-02-11
    by Brad DeLong in Grasping Reality with the Invisible Hand on 2010-02-11 08:05:21
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hersh, Jonathan & Voth, Hans-Joachim, 2009. "Sweet Diversity: Colonial Goods and the Rise of European Living Standards after 1492," CEPR Discussion Papers 7386, C.E.P.R. Discussion Papers.
  2. Robert C. Allen, 2008. "A Review of Gregory Clark's A Farewell to Alms: A Brief Economic History of the World," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 946-73, December.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:315. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise).

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.