Market Forces Shaping Human Capital in Eighteenth‐Century London

26 Pages Posted: 15 Oct 2015

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: November 2015

Abstract

This article draws on quantitative and descriptive data from Robert Campbell's manual for prospective apprentices, The London tradesman (1747), to demonstrate the responsiveness of apprenticeship premiums in mid‐eighteenth‐century London to market forces of supply and demand. It first shows that Campbell's data on mid‐eighteenth‐century journeymen wages, apprenticeship premiums, and masters’ set‐up costs in London are consistent with other sources. It then applies instrumental variable regressions to estimate the elasticity of apprenticeship premiums with respect to journeymen wages and set‐up costs, using Campbell's education and ability requirements by trade to instrument for wages. We find an elasticity of one with respect to wages, and of 0.25 with respect to set‐up costs, both statistically significant at a p‐value less than 0.1%. We interpret these findings as supporting the thesis that apprenticeship played an important role in adapting the English workforce to the skill requirements of the industrial revolution in its early stages, insofar as the institution of apprenticeship in London was representative of other parts of England. Furthermore, by demonstrating the internal and external consistency of Campbell's observations, our findings should encourage their use as an unparalleled source of detailed, trade‐specific wage data from the early years of the industrial revolution.

Suggested Citation

Justman, Moshe and van der Beek, Karine, Market Forces Shaping Human Capital in Eighteenth‐Century London (November 2015). The Economic History Review, Vol. 68, Issue 4, pp. 1177-1202, 2015. Available at SSRN: https://ssrn.com/abstract=2674351 or http://dx.doi.org/10.1111/ehr.12092

Moshe Justman (Contact Author)

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

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

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

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