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Trade, Knowledge, and the Industrial Revolution

  • O'Rourke, Kevin Hjortshøj
  • Rahman, Ahmed
  • Taylor, Alan M.

Technological change was unskilled-labour-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profit-maximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labour biased. The transition to skill-biased technological change was due to a growth in ``Baconian knowledge'' and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6293.

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Date of creation: May 2007
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Handle: RePEc:cpr:ceprdp:6293
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