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An Exceptionally Simple Theory of Industrialization

  • Ahmed S. Rahman

    ()

    (United States Naval Academy)

Historically, industrialization has been associated with falling relative returns to skills. This fact is at odds with most theories of industrialization, which tend to imply rising skill premia as natural concomitants to economic growth. This paper develops a very simple model of historical growth to help solve this puzzle. Assuming that human capital is both a consumption good and an investment good, the model demonstrates how rising education levels, non-monotonic fertility rates, and falling skill premia can all be explained within one theory.

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File URL: http://www.usna.edu/EconDept/RePEc/usn/wp/usnawp27.pdf
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Paper provided by United States Naval Academy Department of Economics in its series Departmental Working Papers with number 27.

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Length: 25 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:usn:usnawp:27
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  1. Jones Charles I., 2001. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(2), pages 1-45, August.
  2. Gary S. Becker & Kevin M. Murphy & Robert F. Tamura, 1990. "Human Capital, Fertility, and Economic Growth," NBER Working Papers 3414, National Bureau of Economic Research, Inc.
  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. Mitch, David, 1983. "The Spread of Literacy in Nineteenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 43(01), pages 287-288, March.
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  7. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World
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  8. Oded Galor & Andrew Mountford, 2008. "Trading Population for Productivity: Theory and Evidence," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 1143-1179.
  9. Gary D. Hansen & Edward C. Prescott, 1999. "Malthus to Solow," Staff Report 257, Federal Reserve Bank of Minneapolis.
  10. Broadberry, S., 1993. "Technological Leadership and Productivity Leadership in Manufacturing Since the Industrial Revolution: Implications for the Convergence Debate," The Warwick Economics Research Paper Series (TWERPS) 414, University of Warwick, Department of Economics.
  11. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
  12. Oded Galor & Omer Moav, 2006. "Das Human-Kapital: A Theory of the Demise of the Class Structure," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 85-117.
  13. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed The Labor Market?," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1169-1213, November.
  14. Horrell Sara & Humphries Jane, 1995. "The Exploitation of Little Children: Child Labor and the Family Economy in the Industrial Revolution," Explorations in Economic History, Elsevier, vol. 32(4), pages 485-516, October.
  15. Claudia Goldin & Lawrence F. Katz, 2007. "The Race between Education and Technology: The Evolution of U.S. Educational Wage Differentials, 1890 to 2005," NBER Working Papers 12984, National Bureau of Economic Research, Inc.
  16. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 693-732, August.
  17. James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
  18. Paul G. Keat, 1960. "Long-Run Changes in Occupational Wage Structure, 1900-1956," Journal of Political Economy, University of Chicago Press, vol. 68, pages 584.
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  20. Autor, David & Dorn, David, 2009. "Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States," IZA Discussion Papers 4290, Institute for the Study of Labor (IZA).
  21. Galor, Oded, 2009. "2008 Lawrence R. Klein Lecture -- Comparative Economic Development: Insights from Unified Growth Theory," CEPR Discussion Papers 7519, C.E.P.R. Discussion Papers.
  22. Claudia Goldin, 1999. "A Brief History of Education in the United States," NBER Historical Working Papers 0119, National Bureau of Economic Research, Inc.
  23. 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.
  24. Larry E. Jones & Michele Tertilt, 2006. "An Economic History of Fertility in the U.S.: 1826-1960," NBER Working Papers 12796, National Bureau of Economic Research, Inc.
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