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Why England? Demand, growth and inequality during the Industrial Revolution

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  • Nico Voigtländer
  • Joachim Voth

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Abstract

Why was England first? And why Europe? We present a probabilistic model that builds on big-push models by Murphy, Shleifer and Vishny (1989), combined with hierarchical preferences. The interaction of exogenous demographic factors (in particular the English low-pressure variant of the European marriage pattern)and redistributive institutions – such as the “old Poor Law” – combined to make an Industrial Revolution more likely. Essentially, industrialization is the result of having a critical mass of consumers that is “rich enough” to afford (potentially) mass-produced goods. Our model is then calibrated to match the main characteristics of the English economy in 1750 and the observed transition until 1850. This allows us to address explicitly one of the key features of the British Industrial Revolution unearthed by economic historians over the last three decades – the slowness of productivity and output change. In our calibration, we find that the probability of Britain industrializing is 5 times larger than France’s. Contrary to the recent argument by Pomeranz, China in the 18th century had essentially no chance to industrialize at all. This difference is decomposed into a demographic and a policy component, with the former being far more important than the latter.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 857.

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Date of creation: May 2005
Date of revision: Dec 2006
Handle: RePEc:upf:upfgen:857

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Web page: http://www.econ.upf.edu/

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Keywords: Inequality; Industrial Revolution; growth; big push; redistribution; steam; general purpose technology;

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  1. Jones Charles I., 2001. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(2), pages 1-45, August.
  2. Gary D. Hansen & Edward C. Prescott, 2002. "Malthus to Solow," American Economic Review, American Economic Association, vol. 92(4), pages 1205-1217, September.
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  4. Foellmi, Reto & Zweimuller, Josef, 2004. "Inequality, market power, and product diversity," Economics Letters, Elsevier, vol. 82(1), pages 139-145, January.
  5. Oded Galor & Omer Moav, 2000. "Natural Selection and the Origin of economic Growth," Working Papers 2000-18, Brown University, Department of Economics.
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  7. Robert William Fogel, 1993. "New Sources and New Techniques for the Study of Secular Trends in Nutritional Status, Health, Mortality, and the Process of Aging," NBER Historical Working Papers 0026, National Bureau of Economic Research, Inc.
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  9. 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.
  10. David S. Landes, 1994. "What room for accident in history?: explaining big changes by small events," Economic History Review, Economic History Society, vol. 47(4), pages 637-656, November.
  11. 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.
  12. Broadberry, Stephen N & Gupta, Bishnupriya, 2005. "The Early Modern Great Divergence: Wages, Prices and Economic Development in Europe and Asia, 1500-1800," CEPR Discussion Papers 4947, C.E.P.R. Discussion Papers.
  13. Horrell, Sara, 1996. "Home Demand and British Industrialization," The Journal of Economic History, Cambridge University Press, vol. 56(03), pages 561-604, September.
  14. Nicholas Crafts, 2005. "The First Industrial Revolution: Resolving the Slow Growth/Rapid Industrialization Paradox," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 525-534, 04/05.
  15. Feinstein, Charles, 1988. "The Rise and Fall of the Williamson Curve," The Journal of Economic History, Cambridge University Press, vol. 48(03), pages 699-729, September.
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Cited by:
  1. Gonçalo Monteiro & Alvaro S. Pereira, 2006. "From Growth Spurts to Sustained Growth: The Nature of Growth and Unified Growth Theory," DEGIT Conference Papers c011_004, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Gonçola Monteiro & Alvaro Pereira, 2006. "From Growth Spurts to Sustained Growth," Discussion Papers 06/24, Department of Economics, University of York.
  3. David Flacher, 2005. "Industrial Revolutions and Consumption: A Common Model to the Various Periods of Industrialization," CEPN Working Papers halshs-00132241, HAL.

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