Market Forces Shaping Human Capital in Eighteenth Century London
30 Pages Posted: 5 Jul 2013
Date Written: July 4, 2013
We draw on quantitative and descriptive data from Robert Campbell’s widely cited manual for prospective apprentices, The London Tradesman (1747) to demonstrate through regression analysis the responsiveness of apprenticeship in mid-eighteenth century London to market forces of supply and demand, and thus its ability to play a useful role in efficiently adapting the English workforce to the changing skill requirements of the Industrial Revolution. We show that variation across trades in apprenticeship premiums were shaped by economic conditions: bounded from above by the expected benefits to the apprentice of acquiring the skills of the trade (Lane, 1996); bounded from below by the expected net training costs to the master, taking into account the delay before the apprentice becomes reasonably productive and the positive probability of the apprentice leaving prematurely (Wallis, 2008); and reflecting the relative bargaining power of master and parent. In attesting to the internal and external consistency of Campbell’s observations, our findings support their further use as a unique, invaluable source of detailed, trade-specific wage data from the early years of the Industrial Revolution.
Keywords: premium, wages, setting-up costs, human capital, industrial revolution, apprenticeship, Campbell, Eighteenth century England
JEL Classification: J31, K31, N23, N33, O15
Suggested Citation: Suggested Citation