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Why England? Demand, growth and inequality during the Industrial Revolution

Author

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  • Nico Voigtländer
  • Joachim Voth
Abstract
Why was England first? And why Europe? We present a probabilistic model that builds on big-push models by Murphy, Shleifer and Vishny (1989), combined with hierarchical preferences. The interaction of exogenous demographic factors (in particular the English low-pressure variant of the European marriage pattern)and redistributive institutions – such as the “old Poor Law” – combined to make an Industrial Revolution more likely. Essentially, industrialization is the result of having a critical mass of consumers that is “rich enough” to afford (potentially) mass-produced goods. Our model is then calibrated to match the main characteristics of the English economy in 1750 and the observed transition until 1850. This allows us to address explicitly one of the key features of the British Industrial Revolution unearthed by economic historians over the last three decades – the slowness of productivity and output change. In our calibration, we find that the probability of Britain industrializing is 5 times larger than France’s. Contrary to the recent argument by Pomeranz, China in the 18th century had essentially no chance to industrialize at all. This difference is decomposed into a demographic and a policy component, with the former being far more important than the latter.

Suggested Citation

  • Nico Voigtländer & Joachim Voth, 2005. "Why England? Demand, growth and inequality during the Industrial Revolution," Economics Working Papers 857, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2006.
    • Handle: RePEc:upf:upfgen:857
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    References listed on IDEAS

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    Cited by:

    1. Gonçola Monteiro & Alvaro Pereira, 2006. "From Growth Spurts to Sustained Growth," Discussion Papers 06/24, Department of Economics, University of York.
    2. David Flacher, 2005. "Industrial Revolutions and Consumption: A Common Model to the Various Periods of Industrialization," Working Papers halshs-00132241, HAL.
    3. David Flacher, 2005. "Industrial Revolutions and Consumption: A Common Model to the Various Periods of Industrialization," CEPN Working Papers halshs-00132241, HAL.
    4. Gonçalo Monteiro & Alvaro S. Pereira, 2006. "From Growth Spurts to Sustained Growth: The Nature of Growth and Unified Growth Theory," DEGIT Conference Papers c011_004, DEGIT, Dynamics, Economic Growth, and International Trade.

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    More about this item

    Keywords

    Inequality; Industrial Revolution; growth; big push; redistribution; steam; general purpose technology;
    All these keywords.

    JEL classification:

    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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