Population Growth and Manufacturing Real Wages in 18th Century England: A Spatial Perspective
34 Pages Posted: 31 Mar 2007
Date Written: May 2004
We develop a two-region population growth model of economic geography and show that a process of urbanization has a substantial impact on the evolution of manufacturing real wages. Whereas real wages decline as the population increases when the spatial structure of the economy is fixed, they actually rise in the long-run when factors are mobile. Agglomeration may hence be seen as a rational response to declining real wages and provides a new explanation of why manufacturing real wages did not decline prior to the Industrial Revolution in England, despite a historically unprecedented population growth.
Keywords: population growth, real wages, economic geography, agglomeration, Industrial Revolution
JEL Classification: N13, N33, R11, R12
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