Falling Real Wages During an Industrial Revolution

Universitat Pompeu Fabra Economics working paper 195

25 Pages Posted: 28 Apr 1997

See all articles by Antonio Ciccone

Antonio Ciccone

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Date Written: OCTOBER 1996

Abstract

The paper shows that the emergence of a relatively more capital intensive, "industrial" production sector with relatively faster total factor productivity growth than the existing less capital intensive, "cottage" production sector will always slow down real wage growth if capital and labor are imperfect substitutes. Real wages will actually fall temporarily if the industrial production sector experiences sufficiently fast total factor productivity growth. This conclusion does not depend on the effect of technological change on the labor demand of industrial firms: Rapid technological change could, in particular, rapidly increase the labor demand of industrial firms, and real wages would still fall.

JEL Classification: D5, N1, O1, O3

Suggested Citation

Ciccone, Antonio, Falling Real Wages During an Industrial Revolution (OCTOBER 1996). Universitat Pompeu Fabra Economics working paper 195. Available at SSRN: https://ssrn.com/abstract=15571 or http://dx.doi.org/10.2139/ssrn.15571

Antonio Ciccone (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34 93 542 1669 (Phone)
+34 93 542 1746 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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