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The plague, the skill-premium, and the road to modern economic growth

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  • Jensen, Martin Kaae
  • Luo, Rui

Abstract

When bubonic plague arrived in Britain in the mid-14th century, it caused dramatic economic and structural change. Within 50 years, the skill-premium was reduced by half, and another 50 years on, agriculture’s share of the labor force had declined by more than 20 percentage points. This paper develops a two-sector pre-industrial growth model and draws on recent data sources covering Late Medieval and Early Modern Britain to explain these and the ensuing developments. Our main findings are that the skill-premium’s decline was related to the guild and apprenticeship system and that it and the other post-Plague adjustments were crucial determinants of the British trajectory toward industrialization. In particular, prior sectoral transformation and the skill-premium’s determination were important when the Early Modern population boom (1525–1654) threatened to reverse the adjustments caused by the Plague.

Suggested Citation

  • Jensen, Martin Kaae & Luo, Rui, 2024. "The plague, the skill-premium, and the road to modern economic growth," Macroeconomic Dynamics, Cambridge University Press, vol. 28(7), pages 1561-1593, October.
    • Handle: RePEc:cup:macdyn:v:28:y:2024:i:7:p:1561-1593_6
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