Journal of Economic Growth

, Volume 11, Issue 4, pp 319–361 | Cite as

Why England? Demographic factors, structural change and physical capital accumulation during the Industrial Revolution

  • Nico Voigtländer
  • Hans-Joachim Voth
Original Article

Abstract

Why did England industrialize first? And why was Europe ahead of the rest of the world? Unified growth theory in the tradition of Galor and Weil (2000, American Economic Review, 89, 806–828) and Galor and Moav (2002, Quartely Journal of Economics, 177(4), 1133–1191) captures the key features of the transition from stagnation to growth over time. Yet we know remarkably little about why industrialization occurred much earlier in some parts of the world than in others. To answer this question, we present a probabilistic two-sector model where the initial escape from Malthusian constraints depends on the demographic regime, capital deepening and the use of more differentiated capital equipment. Weather-induced shocks to agricultural productivity cause changes in prices and quantities, and affect wages. In a standard model with capital externalities, these fluctuations interact with the demographic regime and affect the speed of growth. Our model is calibrated to match the main characteristics of the English economy in 1700 and the observed transition until 1850. We capture one of the key features of the British Industrial Revolution emphasized by economic historians — slow growth of output and productivity. Fertility limitation is responsible for higher per capita incomes, and these in turn increase industrialization probabilities. The paper also explores the availability of nutrition for poorer segments of society. We examine the influence of redistributive institutions such as the Old Poor Law, and find they were not decisive in fostering industrialization. Simulations using parameter values for other countries show that Britain’s early escape was only partly due to chance. France could have moved out of agriculture and into manufacturing faster than Britain, but the probability was less than 25%. Contrary to recent claims in the literature, 18th century China had only a minimal chance to escape from Malthusian constraints.

Keywords

Industrial Revolution Unified growth theory Endogenous growth Transition Calibration British economic growth before 1850 

JEL Classifications

E27 N13 N33 O14 O41 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Acemolgu D., Zilibotti F. (1997). Was prometheus unbound by chance? Risk, Diversification, and Growth. Journal of Political Economy, 105(4): 709–751CrossRefGoogle Scholar
  2. Allen R.C. (1992) Enclosure and the Yeoman/the agricultural development of the South Midlands. Oxford, OUP, pp. 1450–1850Google Scholar
  3. Allen R.C. (2005a). Real wages in Europe and Asia: A first look at the long-term patterns. In: Allen R.C., Bengtsson T., Dribe M. (eds) Living standards in the past. Oxford, OUPGoogle Scholar
  4. Allen, R. C. (2005b). Capital Accumulation, Technological Change, and the Distribution of Income during the British Industrial Revolution. Nuffield College working paper.Google Scholar
  5. Allen, R. C. (2006). Agricultural Productivity and Rural Incomes in England and the Yangtze Delta, c. 1620- c. 1820. Nuffield College working paper.Google Scholar
  6. Allen, R. C., Bassino, J.-P., Ma, D., Moll-Murata, C., & van Zanden, J. L. (2005). Wages, Prices, and Living Standards in China, Japan, and Europe, 1738–1925. Working paper.Google Scholar
  7. Antras P., Voth H.-J. (2003). Factor prices and productivity growth during the British industrial revolution. Explorations in Economic History 38, 52–77CrossRefGoogle Scholar
  8. Ashton T.S. (1964). The Industrial Revolution, 1760–1830. Oxford, OUPGoogle Scholar
  9. Boyer, G. (1990). An economic history of the English poor law, 1750–1850. Cambridge: CUP.Google Scholar
  10. Broadberry, S. & Gupta, B. (2005a). The Early Modern Great Divergence: Wages, Prices and Economic Development in Europe and Asia, 1500–1800. Warwick working paper.Google Scholar
  11. Broadberry, S. & Gupta, B. (2005b). Cotton Textiles and the Great Divergence: Lancashire, India and Shifting Competitive Advantage, 1600–1850. Warwick working paper.Google Scholar
  12. Braudel, F. (1973). Capitalism and Material Life, 1400–1800. New York, Harper and Row.Google Scholar
  13. Cervellati M., Sunde U. (2005). Human capital formation, life expectancy, and the process of development. American Economic Review 95(5): 1653–1672CrossRefGoogle Scholar
  14. Chesnais F. (1992). The demographic transition. Oxford, OUPGoogle Scholar
  15. CIA (2005). CIA fact book 2005: http://www.cia.gov/cia/publications/factbook/Google Scholar
  16. Clark, G. (2003a). The Great Escape: The Industrial Revolution in Theory and in History. Unpublished manuscript, UC Davis.Google Scholar
  17. Clark G. (2003b). Agricultural productivity, prices and wages. In: Mokyr J.(ed) Encylopedia of Economic History, Vol. 1. Oxford, Oxford University Press, pp. 92–96Google Scholar
  18. Clark G. (2005). The Condition of the working-class in England, 1209–2004. Journal of Political Economy 113(6): 1307–1340CrossRefGoogle Scholar
  19. Cole W.A. (1973). Eighteenth-century economic growth revisited. Explorations in Economic History 10, 327–348CrossRefGoogle Scholar
  20. Crafts N.F.R. (1977). Industrial revolution in England and France: Some thoughts on the question, ’Why Was England First?’. Economic History Review, Second Series 30(3): 429–441CrossRefGoogle Scholar
  21. Crafts N.F.R. (1985). British economic growth during the industrial revolution. Oxford, OUPGoogle Scholar
  22. Crafts N.F.R. (1995). Exogenous or endogenous growth? The industrial revolution reconsidered. Journal of Economic History 55(4): 745–772Google Scholar
  23. Crafts N.F.R., Harley K. (1992). Output growth and the British industrial revolution: A restatement of the Crafts-Harley view. Economic History Review 45, 703–730CrossRefGoogle Scholar
  24. Crafts N.F.R., Harley K. (2000). Simulating the two views of the industrial revolution. Journal of Economic History 60:819–841Google Scholar
  25. Diamond J. (2004). Collapse: How societies choose to fail or succeed. New York,VikingGoogle Scholar
  26. Feinstein C. (1981). Capital accumulation and the industrial revolution. In: Floud R., McCloskey D.(eds) The Economic history of Britain since 1700, Vol. I. Cambridge, CUP, pp 00–00Google Scholar
  27. Fogel R. (1994). Economic growth, population theory, and physiology: The bearing of long-term processes on the making of economic policy. American Economic Review 84(3): 369–395Google Scholar
  28. Galor O. (2005). From stagnation to growth: Unified growth theory. In: Aghion P., Durlauf S.(eds) Handbook of economic growth, Vol. 1A. Amsterdam, North-Hollandpp 00–00Google Scholar
  29. Galor O., Moav O. (2002). Natural selection and the origin of economic growth. Quarterly Journal of Economics, 117(4): 1133–1191CrossRefGoogle Scholar
  30. Galor O., Moav O. (2004). From physical to human capital accumulation: Inequality and the process of development. Review of Economic Studies 71, 1001–1026CrossRefGoogle Scholar
  31. Galor O., Mountford A. (2003). Trade, Demographic Transition, and the Great Divergence: Why are a Third of People Indian or Chinese? Hebrew University Working Paper.Google Scholar
  32. Galor O., Weil D. (2000). Population, technology and growth: From the malthusian regime to the demographic transition and beyond. American Economic Review 90, 806–828CrossRefGoogle Scholar
  33. Gilboy E. (1932). Demand as a factor in the industrial revolution. reprinted. In: Cole A.H.(ed) Facts and factors in economic history. Cambridge, MA: Harvard University PressGoogle Scholar
  34. Goldstone J. (2002). Efflorescences and economic growth in world history. Rethinking the “Rise of the West” and the industrial revolution. Journal of World History 13(2): 323–389Google Scholar
  35. Hajnal J. (1965). European marriage in perspective. In: Glass D.V., Eversley D.E.C.(eds) Population in history. London, ArnoldGoogle Scholar
  36. Hansen G.D., Prescott E. (2002). Malthus to solow. American Economic Review 92(4): 1205–1217CrossRefGoogle Scholar
  37. Horrell S. (1996). Home demand and British industrialization. Journal of Economic History 56(3): 561–604Google Scholar
  38. Jones, C. (2001). Was an industrial revolution inevitable? Economic growth over the very long run. Advances in Macroeconomics, 1(2).Google Scholar
  39. King P. (1997). Pauper inventories and the material lives of the poor in the eighteenth and early nineteenth centuries. In: Hitchcock T., King P., Sharpe P.(eds) Chronicling poverty: The voices and strategies of the english poor. Basingstoke, HoundsmillsGoogle Scholar
  40. Kögel T., Prskawetz A. (2001), Agricultural procutivity growth and escape from the malthusian trap. Journal of Economic Growth 6, 337–357CrossRefGoogle Scholar
  41. Labrousse E., Romano R., Dreyfus F.-G. (1970). Le Prix Du Froment en France 1726–1913. Paris, SEVPENGoogle Scholar
  42. Lagerlöf N.-P. (2003). From malthus to modern growth: Can epedemics explain the three regimes. International Economic Review 44(2): 755–777CrossRefGoogle Scholar
  43. Lagerlöf N.-P. (2006). The Galor–Weil model revisited: A quantitative exploration. Journal of Economic Dynamics 9(1): 116–142CrossRefGoogle Scholar
  44. Landes D. (1999). The wealth and poverty of nations: Why some are so rich and some so poor. Harvard, Harvard University PressGoogle Scholar
  45. Lindert P.H. (2000). When did inequality rise in Britain and America?. Journal of Income Distribution 9(1): 11–25CrossRefGoogle Scholar
  46. Lindert P.H., Williamson J.G. (1982). Revising england’s social tables, 1688–1812. Explorations in Economic History 19(4): 385–408CrossRefGoogle Scholar
  47. Maddison, A. (2003). The world economy: Historical statistics. Paris, France: Development Centre of the OECD.Google Scholar
  48. Matsuyama K. (1991). Increasing returns, industrialization, and indeterminacy of equilibrium. Quarterly Journal of Economics 106(2): 617–650CrossRefGoogle Scholar
  49. Matsuyama K. (2002). The rise of mass consumption societies. Journal of Political Economy 110(5): 1035–1070CrossRefGoogle Scholar
  50. McCloskey D.N., John N. (1984). Corn at interest: The extent and cost of grain storage in medieval england. American Economic Review 74(1): 174–187Google Scholar
  51. Mitchell B.R., Jones H.G. (1971). Second abstract of British historical statistics. Cambridge, CUPGoogle Scholar
  52. Mokyr J. (1977). Demand vs. supply in the industrial revolution. Journal of Economic History 37(4): 981–1008CrossRefGoogle Scholar
  53. Mokyr J. (1990). The lever of riches: Technological creativity and economic progress. New York, Oxford University PressGoogle Scholar
  54. Mokyr J. (1999). Editor’s introduction. The new economic history and the industrial revolution. In: Mokyr J.(ed) The British industrial revolution: An economic perspective. Boulder, CO: WestviewGoogle Scholar
  55. Mokyr, J. (2002). Why was the industrial revolution a European phenomenon? Supreme Court Economic Review, 9.Google Scholar
  56. Mokyr, J., & Voth, H.-J. (2008). Understanding Growth in Europe, 1700–1870—First Industrializations, Unified Growth Theory, and Beyond. In: S. Broadberry, Kevin O’Rourke, Cambridge economic history of europe, Vol. I, Cambridge, forthcoming.Google Scholar
  57. Mosk C. (1976). Fecundity, infanticide, and food consumption in Japan. Explorations in Economic History 15(3): 269–289CrossRefGoogle Scholar
  58. Murphy K.M., Shleifer A., Vishny R.W. (1989a). Income distribution, market size, and industrialization. Quarterly Journal of Economics 104(3): 537–564CrossRefGoogle Scholar
  59. Murphy K.M., Shleifer A., Vishny R. (1989b). Industrialization and the big push. Journal of Political Economy 97(5): 1003–1026CrossRefGoogle Scholar
  60. North D.C., Thomas R.P. (1973). The rise of the western world: A new economic history. Cambridge, Cambridge University PressGoogle Scholar
  61. Pomeranz K. (2000). The great divergence: China, Europe, and the making of the modern world economy. Princeton, NJ: Princeton University PressGoogle Scholar
  62. Romer P.M. (1990). Endogenous technological change. Journal of Political Economy 98(5): 71–102CrossRefGoogle Scholar
  63. Rozman G. (1973). Urban Networks in Ch’ing China and Tokugawa Japan. Princeton, NJ: Princeton University PressGoogle Scholar
  64. Stokey N. (2001). A Quantitative model of the British industrial revolution, 1780–1850. Carnegie-Rochester Conference Series on Public Policy 55, 55–109CrossRefGoogle Scholar
  65. Strulik, H. (2006), Patterns of Demographic Development and Structural Change. University of Copenhagen working paper.Google Scholar
  66. Temin P., Voth H.-J. (2005). Credit rationing and crowding out during the industrial revolution: Evidence from hoare’s Bank 1702–1862. Explorations in Economic History 42(3): 325–348CrossRefGoogle Scholar
  67. Voth H.-J. (2003). Living standards during the industrial revolution: An economist’s guide. American Economic Review 93(2): 221–226CrossRefGoogle Scholar
  68. de Vries J. (1984). European urbanization 1500–1800. London, MethuenGoogle Scholar
  69. Williamson J.G. (1984). Why was British growth so slow during the Industrial Revolution?. Journal of Economic History 44(3): 687–712CrossRefGoogle Scholar
  70. Wrigley E.A. (1983). The growth of population in eighteenth-century England: A conundrum resolved. Past and Present 98, 121–150Google Scholar
  71. Wrigley E.A. (1988). Continuity, chance and change: The character of the industrial revolution in England. Cambridge, Cambridge University PressGoogle Scholar
  72. Wrigley E.A., Davies R.S., Oeppen J., Schofield R. (1997). English population history from family reconstitution 1580–1837. Cambridge, CUPGoogle Scholar
  73. Wrigley E.A., Schofield R. (1981). The population history of England, 1541–1871: A reconstruction. Cambridge, MA, Harvard University PressGoogle Scholar
  74. Zweimüller J. (2000). Schumpeterian entrepreneurs meet Engel’s Law: The impact of inequality on innovation-driven growth. Journal of Economic Growth 5(2): 185–206CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2006

Authors and Affiliations

  • Nico Voigtländer
    • 1
  • Hans-Joachim Voth
    • 2
  1. 1.Economics DepartmentUniversitat Pompeu FabraBarcelonaSpain
  2. 2.ICREA and Economics DepartmentUniversitat Pompeu FabraBarcelonaSpain

Personalised recommendations