We find that productivity growth was zero between 1250 and 1600. From 1600 to 1810, productivity growth was modest at 4% per decade. It then accelerate sharply at the time of the Industrial Revolution to 18% per decade. 2/8
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These results shed light on WHY growth began. In particular, broad-based growth substantially preceded the liberal institutional reforms of the Civil War and Glorious Revolution, and may therefore have contributed to causing them. 3/8
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We estimate changes in productivity as shifts in the economy’s labor demand curve. The crucial element is to account for the influence of plague-induced swings in the population on real wages. We do this by estimating a Malthusian model of the economy. 4/8
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Here is a key figure. Notice how the economy is moving up and down a (roughly) stable labor demand curve before 1600. Hence, no productivity growth. After that the points shift off the earlier curve. 5/8pic.twitter.com/WLNuIIMQzo
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Here is our estimate of productivity (in black) along with real wages (in gray) over our sample. After 1600, the rapidly expanding population holds back real wages relative to productivity. Before 1600, swings in real wages are largely explained by swings in the population. 6/8pic.twitter.com/zr7LdJKxZf
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We also estimate the strength of Malthusian population forces. These were relatively weak. We estimate that a doubling of real wages only lead to a 6% increase in population growth per decade. 7/8
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The Bayesian methods we use are quite useful when working with historical data since they make it easy to deal with missing observations (which are simply treated as unobservables). 8/8
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Very interesting. Have you also considered the role of banking as a contributing factor?
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Very interesting paper. The English banking system was limited and primitive before 1700. Mortgaging was also limited - almost nonexistent before 1600. See https://joie-blog.net/financial-institutions-and-the-british-industrial-revolution-did-financial-underdevelopment-hold-back-growth …
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@BariFaisal interesting for your principles course with Cheema Sahab.Bedankt, Twitter gebruikt dit om je tijdlijn te verbeteren. Ongedaan makenOngedaan maken
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