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Why England? Demand, Growth and Inequality During the Industrial Revolution

  • Nico Voigtländer
  • Hans-Joachim Voth

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. 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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Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 208.

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Date of creation: Sep 2015
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Handle: RePEc:bge:wpaper:208
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  1. Marco Da Rin & Thomas Hellmann, . "Banks as Catalysts for Industrialization," Working Papers 103, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Charles I. Jones, 1999. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," NBER Working Papers 7375, National Bureau of Economic Research, Inc.
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  11. N. F. R. Crafts, 1977. "Industrial Revolution in England and France: Some Thoughts on the Question, “Why was England First?”," Economic History Review, Economic History Society, vol. 30(3), pages 429-441, 08.
  12. 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.
  13. Shachar, Ari Y. Ben, 1984. "Demand versus Supply in the Industrial Revolution: A Comment," The Journal of Economic History, Cambridge University Press, vol. 44(03), pages 801-805, September.
  14. Reto Foellmi & Josef Zweimueller, . "Inequality, Market Power, and Product Diversity," IEW - Working Papers 145, Institute for Empirical Research in Economics - University of Zurich.
  15. Robert W. Fogel, 1986. "Nutrition and the Decline in Mortality since 1700: Some Preliminary Findings," NBER Chapters, in: Long-Term Factors in American Economic Growth, pages 439-556 National Bureau of Economic Research, Inc.
  16. 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.
  17. Horrell, Sara, 1996. "Home Demand and British Industrialization," The Journal of Economic History, Cambridge University Press, vol. 56(03), pages 561-604, September.
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