Journal of Economic Growth

, Volume 18, Issue 4, pp 373–409 | Cite as

Luddites, the industrial revolution, and the demographic transition

  • Kevin Hjortshøj O’Rourke
  • Ahmed S. Rahman
  • Alan M. Taylor
Article

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.

Keywords

Skill bias Directed technological change Endogenous growth Demography Unified growth theory 

JEL Classification

O31 O33 J13 J24 N10 

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Kevin Hjortshøj O’Rourke
    • 1
  • Ahmed S. Rahman
    • 2
  • Alan M. Taylor
    • 3
  1. 1.University of Oxford, CEPR, and NBEROxfordUK
  2. 2.United States Naval AcademyAnnapolisUSA
  3. 3.University of California, Davis, NBER, and CEPRDavisUSA

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