Luddites, the industrial revolution, and the demographic transition

Journal article

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. © 2013 Springer Science+Business Media New York.

Authors: O'Rourke, K; Rahman, A; Taylor, A

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Springer US*
• Journal: Journal of Economic Growth
• Volume: 18
• Issue: 4
• Pages: 373-409
• Publication date: 2013-12-01
• DOI: 10.1007/s10887-013-9096-y
• EISSN: 1573-7020
• ISSN: 1381-4338
• Keywords: Endogenous growth; Directed technological change; Unified growth theory; Demography; Skill bias