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Trade, Knowledge, and the Industrial Revolution

52 Pages Posted: 27 Jun 2007 Last revised: 6 Sep 2010

Kevin H. O'Rourke

University of Dublin, Trinity College; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Ahmed Rahman

United States Naval Academy

Alan M. Taylor

University of California, Davis - Department of Economics; University of Virginia - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 4 versions of this paper

Date Written: April 2007

Abstract

Technological change was unskilled-labor-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profit-maximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labor biased. The transition to skill-biased technological change was due to a growth in "Baconian knowledge" and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.

Suggested Citation

O'Rourke, Kevin H. and Rahman, Ahmed and Taylor, Alan M., Trade, Knowledge, and the Industrial Revolution (April 2007). NBER Working Paper No. w13057. Available at SSRN: https://ssrn.com/abstract=986907

Kevin H. O'Rourke (Contact Author)

National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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University of Dublin, Trinity College ( email )

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Ahmed Rahman

United States Naval Academy ( email )

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Alan M. Taylor

University of California, Davis - Department of Economics ( email )

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HOME PAGE: http://www.econ.ucdavis.edu/faculty/amtaylor/

University of Virginia - Department of Economics ( email )

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HOME PAGE: http://people.virginia.edu/~amt7u

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://nber.org

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

HOME PAGE: http://cepr.org

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