Centro Studi Luca d'Agliano Development Studies Working Paper No. 230
52 Pages Posted: 25 Jul 2007
Date Written: May 2007
Technological change was unskilled-labor-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profit-maximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labor biased. The transition to skill-biased technological change was due to a growth in "Baconian knowledge" and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.
Keywords: Endogenous growth, demography, trade
JEL Classification: O31, O33, J13, F15, N10, J24
Suggested Citation: Suggested Citation
O'Rourke, Kevin H. and Rahman, Ahmed and Taylor, Alan M., Trade, Knowledge and the Industrial Revolution (May 2007). Available at SSRN: https://ssrn.com/abstract=1002625 or http://dx.doi.org/10.2139/ssrn.1002625