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Skill Premium and Technological Change in the Very Long Run: 1300-1914

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  • Rui Luo

Abstract

This paper sets out to explain the historical development of the skill premium in western Europe over a period ranging from the pre-modern era to the modern era (circa 1300 to 1914). We develop a model of the skill premium and technological change over the very long run which endogenously accounts for the transition across different growth regimes in this period. The model integrates two key elements in long-run growth, the human capital investment and the capital-human capital ratio, into the analysis and successfully explains the declining skill premium from 1300 to 1600 and the stable skill premium from 1600 to 1914. The explanation elucidates a number of well-known historical facts that have not been previously examined in the study of the skill premium.

Suggested Citation

  • Rui Luo, 2017. "Skill Premium and Technological Change in the Very Long Run: 1300-1914," Discussion Papers in Economics 17/09, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:17/09
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp17-09.pdf
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    References listed on IDEAS

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    1. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(4), pages 1001-1026.
    2. Oded_Galor, 2004. "From Stagnation to Growth:Unified Growth Theory," Working Papers 2004-15, Brown University, Department of Economics.
    3. Galor, Oded, 2005. "From Stagnation to Growth: Unified Growth Theory," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 4, pages 171-293, Elsevier.
    4. Allen, Robert C., 2001. "The Great Divergence in European Wages and Prices from the Middle Ages to the First World War," Explorations in Economic History, Elsevier, vol. 38(4), pages 411-447, October.
    5. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
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    Cited by:

    1. Olarreaga, Marcelo & Cruz, Marcio & Milet, Emmanuel, 2017. "Online Exports and the Wage Gap," CEPR Discussion Papers 12092, C.E.P.R. Discussion Papers.
    2. Marcio Cruz & Emmanuel Milet & Marcelo Olarreaga, 2020. "Online exports and the skilled-unskilled wage gap," PLOS ONE, Public Library of Science, vol. 15(5), pages 1-24, May.
    3. Klaus Desmet & Avner Greif & Stephen L. Parente, 2020. "Spatial competition, innovation and institutions: the Industrial Revolution and the Great Divergence," Journal of Economic Growth, Springer, vol. 25(1), pages 1-35, March.

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    More about this item

    Keywords

    skill premium; technological change; human capital investment; capital-human capital ratio; growth regimes;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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