Luddites, the industrial revolution, and the demographic transition

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

Research output: Contribution to journalArticle

Abstract

Technological change was unskilled-labor-biased during the early industrial revolution, but is skill-biased today. This implies a rich set of non-monotonic macroeconomic dynamics which are not embedded in extant unified growth models. We present historical evidence and develop a model which can endogenously account for these facts, where factor bias reflects profit-maximizing decisions by innovators. In a setup with directed technological change, and fixed as well as variable costs of education, initial endowments dictate that the early industrial revolution be unskilled-labor-biased. Increasing basic knowledge then causes a growth takeoff, an income-led demand for fewer but more educated children, and a transition to skill-biased technological change in the long run.

Original languageEnglish (US)
Pages (from-to)373-409
Number of pages37
JournalJournal of Economic Growth
Volume18
Issue number4
DOIs
StatePublished - Dec 2013

Keywords

  • Demography
  • Directed technological change
  • Endogenous growth
  • Skill bias
  • Unified growth theory

ASJC Scopus subject areas

  • Economics and Econometrics

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