Market Forces Shaping Human Capital in Eighteenth Century London

26 Pages Posted: 20 Aug 2013

See all articles by Moshe Justman

Moshe Justman

Ben-Gurion University of the Negev - Department of Economics; University of Melbourne - Melbourne Institute of Applied Economic and Social Research

Karine van der Beek

Ben-Gurion University of the Negev - Department of Economics

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Date Written: August 2013

Abstract

We draw on quantitative and descriptive data from Robert Campbell’s widely cited manual for prospective apprentices, The London Tradesman (1747), to demonstrate the responsiveness of apprenticeship in mid-eighteenth century London to market forces of supply and demand. We regress apprenticeship premiums on journeymen’s wages, set-up costs, and a selection of employment conditions and requirements across 178 trades, and find a significant elasticity of 0.4 with respect to wages and 0.25 with respect to set-up costs. We interpret this as supporting an economic model that views premiums as bounded from above by the expected benefits 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 possibility of the apprentice terminating his service prematurely (Wallis, 2008); and reflecting the relative bargaining power of master and parent. This supports the thesis that apprenticeship played an important role in adapting the English workforce to the skill requirements of the Industrial Revolution. Moreover, by demonstrating 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: apprenticeship, Industrial Revolution, tradesmen’s wages, London, eighteenth century, Robert Campbell

JEL Classification: N33

Suggested Citation

Justman, Moshe and van der Beek, Karine, Market Forces Shaping Human Capital in Eighteenth Century London (August 2013). Melbourne Institute Working Paper No. 28/13. Available at SSRN: https://ssrn.com/abstract=2312984 or http://dx.doi.org/10.2139/ssrn.2312984

Moshe Justman

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
+972 864 72292 (Phone)
+972 864 72941 (Fax)

University of Melbourne - Melbourne Institute of Applied Economic and Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

Karine Van der Beek (Contact Author)

Ben-Gurion University of the Negev - Department of Economics ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

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