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Luddites, the industrial revolution, and the demographic transition

  • Kevin O’Rourke

    ()

  • Ahmed Rahman

    ()

  • Alan Taylor

    ()

Technological change was unskilled-labor-biased during the early industrial revolution, but is skill-biased today. This implies a rich set of non-monotonic macroeconomic dynamics which are not embedded in extant unified growth models. We present historical evidence and develop a model which can endogenously account for these facts, where factor bias reflects profit-maximizing decisions by innovators. In a setup with directed technological change, and fixed as well as variable costs of education, initial endowments dictate that the early industrial revolution be unskilled-labor-biased. Increasing basic knowledge then causes a growth takeoff, an income-led demand for fewer but more educated children, and a transition to skill-biased technological change in the long run. Copyright Springer Science+Business Media New York 2013

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Article provided by Springer in its journal Journal of Economic Growth.

Volume (Year): 18 (2013)
Issue (Month): 4 (December)
Pages: 373-409

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Handle: RePEc:kap:jecgro:v:18:y:2013:i:4:p:373-409
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=102931

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