Journal of Economic Growth

, Volume 18, Issue 4, pp 373-409

First online:

Luddites, the industrial revolution, and the demographic transition

  • Kevin Hjortshøj O’RourkeAffiliated withUniversity of Oxford, CEPR, and NBER
  • , Ahmed S. RahmanAffiliated withUnited States Naval Academy
  • , Alan M. TaylorAffiliated withUniversity of California, Davis, NBER, and CEPR Email author 

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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.


Skill bias Directed technological change Endogenous growth Demography Unified growth theory

JEL Classification

O31 O33 J13 J24 N10