Why England? Demand, growth and inequality during the Industrial Revolution
AbstractWhy 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 InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 857.
Date of creation: May 2005
Date of revision: Dec 2006
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Web page: http://www.econ.upf.edu/
Inequality; Industrial Revolution; growth; big push; redistribution; steam; general purpose technology;
Other versions of this item:
- Nico Voigtländer & Hans-Joachim Voth, 2005. "Why England? Demand, Growth and Inequality During the Industrial Revolution," Working Papers 208, Barcelona Graduate School of Economics.
- N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E25 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-29 (All new papers)
- NEP-HIS-2005-09-29 (Business, Economic & Financial History)
- NEP-MAC-2005-09-29 (Macroeconomics)
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