Discussion Paper Details

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Title: Luddites and the Demographic Transition

Author(s): Kevin Hjortshøj O'Rourke, Ahmed Rahman and Alan M. Taylor

Publication Date: November 2008

Keyword(s): demography, endogenous growth and unified growth theory

Programme Area(s): International Macroeconomics

Abstract: Technological change was unskilled-labor-biased during the early Industrial Revolution, but is skill-biased today. This is not embedded in extant unified growth models. We develop a model which can endogenously account for these facts, where factor bias reflects profit maximizing decisions by innovators. Endowments dictate that the early Industrial Revolution be unskilled-labor-biased. Increasing basic knowledge causes a growth takeoff, an income-led demand for fewer educated children, and the transition to skill-biased technological change. The simulated model tracks British industrialization in the 18th and 19th centuries and generates a demographic transition without relying on either rising skill premia or exogenous educational supply shocks.

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Bibliographic Reference

O'Rourke, K, Rahman, A and Taylor, A. 2008. 'Luddites and the Demographic Transition'. London, Centre for Economic Policy Research.