Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107578
Authors: 
Broadberry, Stephen
Ghosal, Sayantan
Proto, Eugenio
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 8791
Abstract: 
Although the Industrial Revolution is often characterized as the culmination of a process of commercialisation, the precise nature of such a link remains unclear. This paper models and analyzes such link: the role of commercialisation in raising efficiency wages as impersonal and anonymous labour market transactions replace personalized customary relations. In the presence of an aggregate capital externality, we show that the resulting shift in relative factor prices leads to higher capital-intensity in the production technology, resulting in a faster rate of technological progress. We provide historical evidence using European data to show that England was among the most urbanized and the highest wage countries at the onset of the Industrial Revolution. We finally calibrate the model to quantify the impact of a higher degree of anonymity on industrial production growth in England between 1300 and 1800.
Subjects: 
efficiency wages
anonymity
industrial revolution
commercialisation
learning by doing
JEL: 
N13
O14
O43
Document Type: 
Working Paper

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