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Capital-Skill Complementarity and the Emergence of Labor Emancipation

Author

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  • Boris Gershman
  • Quamrul H. Ashraf
  • Francesco Cinnirella
  • Oded Galor
  • Erik Hornung

Abstract

This paper advances a novel hypothesis regarding the historical roots of labor emancipation. It argues that the decline of coercive labor institutions in the industrial phase of development has been an inevitable by-product of the intensification of capital-skill complementarity in the production process. In light of the growing significance of skilled labor for fostering the return to physical capital, elites in society were induced to relinquish their historically profitable coercion of labor in favor of employing free skilled workers, thereby incentivizing the masses to engage in broad-based human capital acquisition, without fear of losing their skill premium to expropriation. In line with the proposed hypothesis, exploiting a plausibly exogenous source of variation in early industrialization across regions of nineteenth-century Prussia, capital abundance is shown to have contributed to the subsequent intensity of de facto serf emancipation.

Suggested Citation

  • Boris Gershman & Quamrul H. Ashraf & Francesco Cinnirella & Oded Galor & Erik Hornung, 2017. "Capital-Skill Complementarity and the Emergence of Labor Emancipation," Working Papers 2017-04, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2017-04
    DOI: 10.17606/q4ev-w066
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    Cited by:

    1. Oto-Peralías, Daniel, 2019. "Delegation of Governmental Authority in Historical Perspective: Lordships, State Capacity and Development," SocArXiv k8mzr, Center for Open Science.
    2. Madsen, Jakob & Strulik, Holger, 2020. "Technological change and inequality in the very long run," European Economic Review, Elsevier, vol. 129(C).
    3. Jedwab, Remi & Johnson, Noel & Koyama, Mark, 2020. "The Economic Impact of the Black Death," CEPR Discussion Papers 15132, C.E.P.R. Discussion Papers.
    4. Becker, Sascha O. & Hornung, Erik, 2020. "The Political Economy of the Prussian Three-Class Franchise," The Journal of Economic History, Cambridge University Press, vol. 80(4), pages 1143-1188, December.
    5. Joerg Baten & Ralph Hippe, 2018. "Geography, land inequality and regional numeracy in Europe in historical perspective," Journal of Economic Growth, Springer, vol. 23(1), pages 79-109, March.
    6. Sarid, Assaf & Mokyr, Joel & van der Beek, Karine, 2019. "The Wheels of Change: Human Capital, Millwrights, and Industrialization in Eighteenth-Century England," CEPR Discussion Papers 14138, C.E.P.R. Discussion Papers.
    7. Parente, Stephen L. & Sáenz, Luis Felipe & Seim, Anna, 2019. "Income, Education and Democracy," Research Papers in Economics 2019:3, Stockholm University, Department of Economics.

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    More about this item

    Keywords

    Labor coercion; serfdom; emancipation; industrialization; physical capital accumulation; capital-skill complementarity; demand for human capital; nineteenth-century Prussia;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J47 - Labor and Demographic Economics - - Particular Labor Markets - - - Coercive Labor Markets
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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